Reduced inequalities – DDRN

Do Ethnic Chinese Malaysians Actually Speak Chinese?

Francesco Biancalana — Tue, 21 Apr 2026 14:26:15 +0000

Scholars often observed how less-dominant languages are being spoken less and less. As a result, the dominant varieties might take over, leading the world toward less multilingual societies and cultural losses. Are non-Mandarin Chinese varieties in Malaysia an analogous trend of monolingualism and cultural loss? When the British colonised Malaysia, they regarded the Malays as unskilled and unable to develop the colonial economy. Chinese and Indian immigrants were considered as labourers. These migrants brought along their community languages so that they were able to communicate and stay close to help one another. What is the current sociolinguistic situation of Malaysian Chinese communities?

Linguistic Overview

Malaysia is a federation in Southeast Asia composed of 13 states and 3 separately administered federal territories. Such vast territory is characterised by a distinct linguistic landscape, the three major ethnic groups are Malay, Chinese, and Indian. Diverse communities who gained independence from British rule in 1957. On top of that, other minority groups are further observed in everyday life such as Vietnamese, French, German, Nepali, Tagalog, Bahasa Indonesian, Korean, and Japanese. In 2020, Malaysian Chinese are the second-largest ethnic community with approximately 6.91 million members among Malaysian citizens, the so called “ethnic Chinese” or in some specific cases “Tang people” 唐人 tángrén. Identifying themselves as distinctive groups with a historical inheritance of identity, reflecting their own linguistic and cultural varieties, such as the people from the Chinese territories of Fujian, Hakka, Fuzhou, Guangxi, Xinghua, Fuqing and others. Although linguists classify Chinese language varieties as distinct languages, they are often referred to as dialects. Many of these varieties are mutually unintelligible, even among speakers within the same group. The Chinese varieties spoken by Malaysian Chinese communities include several subgroups of Min (i.e., Hokkien, Teochew, Xinghua, Hainan, Foochow), Hakka, and Yue (i.e., Cantonese).

The dominance of Mandarin among Chinese communities in Mainland China, Taiwan, Macao, Hong Kong, Singapore, and other regions has been widely reported and analysed; this article focuses on the case of Malaysia. Although some Chinese schools in various overseas communities still teach dialects. The current mainstream trend in international Chinese inheritance language teaching is to unify the use of Mandarin as the standard, the so called “Common Language” 普通话 pǔtōnghuà. With an increase in Mandarin Chinese literacy resulting from Chinese medium education, formal usage of dialects has decreased over the years and may only be used in rural churches for preaching and reading of religious texts. Chinese primary schools in Malaysia are often funded by Chinese associations and individuals, with support sometimes politically incentivised during elections by Chinese-based parties. Mandarin was introduced as the medium of instruction in the 1920s and is widely used in media, education, and increasingly among younger Malaysian Chinese. There are also newspapers, magazines, dramas, and films on television and in cinemas using Mandarin as the primary medium.

Historical and Social Frameworks

Under British rule, schools for locals and migrant children were divided according to the languages of instruction. As a result, the colonial government did little to promote national integration or foster a shared identity, and migrant communities largely remained in separate enclaves without a strong sense of belonging to the nation. The history of the racial conflicts in Malaysia began with the Chinese migrations in the 19th century and was exacerbated in 1957 after the independence from the United Kingdom. The colonial rule and the Japanese occupation let to a communist insurgency with fragile race relations. The selection of Malay, the language of the majority, as the national and official language, along with special privileges granted under the Malaysian Constitution (e.g., customary land rights) was perceived as racially biased. Consequently, the majoritarian party, United Malays National Organisation (i.e., UMNO), significantly lost parliamentary seats. While it still held a majority in Parliament, the Chinese-based opposition party claimed “victory”. As a result, the tensions between Malays and Chinese communities culminated in the 1969 racial riots. In response, Malaysian policymakers promoted Bahasa Malaysia as the national language and developed a national education system to foster cultural unity and to support the nation’s social and political development. During the 1970s and 1980s, this approach came to be known as the ‘One Language One Culture’ policy, because it promoted a single, unified national culture.

Social tensions declined in the 1990s with government support for the teaching of standardised ethnic languages as a school subject. Standardised ethnic languages, namely Mandarin for the Chinese and Tamil for the Indian, serve as the medium of instruction. The dominant socio-political influences decide the family language for communication rather than parents/grandparents. Likewise, studies have also shown that many Malay children are not speaking Malay community languages, while Indian children are not learning Telugu, Gujarati, Punjabi and Malayalam. Children who attend Chinese or Tamil medium primary schools often acquire an additional language, Mandarin or Tamil. However, Tamil medium private schools are largely absent, as the Tamil community often cannot afford this option. Consequently, many families choose not to pass on the ethnic language to children, prioritising standard languages instead.

As reported by several analysts and scholars, racial discrimination in Malaysia remains far from being resolved. Racism pervades multiple aspects of contemporary Malaysian society, including employment-related discrimination, education, economic policies, housing, and language policies. Systemic exclusion from meaningful employment opportunities contributes to income inequality, social marginalisation, and intergenerational disadvantage, in breach of the Universal Declaration of Human Rights and key International Labour Organisation conventions. Research indicates that students who experience racial bias are likely to undergo trauma, leading to decreased confidence and motivation, eroding academic performance, and negatively affecting long-term social and economic mobility. Moreover, racism in the housing sector is characterised by a combination of prejudice and structural weaknesses in state and federal regulation and policy. Regarding language policy, discriminatory practices have been observed affecting Chinese minorities and non-Malay-speaking individuals within Malay communities. However, it is important to highlight that multilinguism in Malaysia is allowed and incentivised. Article 152 of the Federal Constitution states, “While Malay is the national language, the freedom to learn, use and develop the mother tongue of all communities is expressly guaranteed”. Additionally, documents such as UNESCO Universal Declaration on Cultural Diversity (2001) affirm the importance of cultural plurality and recognise that “All persons have therefore the right to express themselves and to create and disseminate their work in the language of their choice, and particularly in their mother tongue” (i.e., Article 5). Conversely, it has been reported how Standard Chinese is gradually taking on this role, even replacing Chinese dialects within the domestic domain.

New Generations VS Old Generation?

To determine the active use of a language, linguists analyse several sociolinguistic factors, one of the most significant being usage among young people, who can ensure the preservation of both the language and the corresponding culture. Several factors contribute to the ongoing language shift among Chinese Malaysians. A significant number of Chinese Malaysian parents send children to Chinese-medium primary schools, where Mandarin serves as the medium of instruction. However, few studies have examined how the younger generation perceives the importance of the relation between dialects and cultural heritage. At the same time, the dominance of major languages in most social and professional domains has reduced opportunities to use community languages. In the broader context, speaking Mandarin is advantageous because it allows individuals to claim membership within the Chinese community worldwide. In the past, membership in Chinese dialect groups in Malaysia was essential for survival and for business networks. Giving speakers access to cultural ideals, norms, and ways of thinking that collectively contribute to the community. However, heritage languages now have low instrumental value, compared to Mandarin. Therefore, younger generations increasingly perceive Mandarin as conveying higher social prestige due to wider versatility of the language. On another note, research suggests that younger Chinese Malaysians tend to feel more positively toward Malaysian Mandarin Chinese than toward the variety spoken in Mainland China. Indicating that the language and cultural preferences of young Malaysians may reflect a strong sense of local cultural identity rather than external influence.

Studies on older generations bring peculiar results. Not only are new generations giving up on community languages, but also parents and grandparents seem to be slowly shifting toward Mandarin. The findings indicate that participants used Chinese heritage languages in everyday lives, particularly in domestic domains, employment, religion, and friendship. However, there is a noticeable shift toward Mandarin, which is increasingly perceived and used as the primary medium of communication in analogous circumstances. Analysis of the interviews suggests that the main functional distinctions between these languages remain in communication with friends and with family members or peers of the same or older generations. Not only do middle-aged and older speakers rely on Mandarin when interacting with younger generations who cannot understand or speak Chinese heritage languages, but also with individuals from other Malaysian states who may not share the same heritage languages. This language shift is not driven by personal preference for Mandarin among middle-aged and older speakers. Rather, it reflects a pragmatic need to accommodate younger generations and others who do not speak Chinese heritage languages. Moreover, recent studies also investigated the reasons that led parents to shift to Mandarin. Exposure of children to the heritage language through having grandparents as carers and media was not effective for language maintenance. Some parents also believed that transmitting heritage languages was not considered useful. In other circumstances, children are responsible for ‘micro-language decisions’ at the family level. The choice of Mandarin and English was affirmed by the broader sociopolitical context, whereby proficiency in standard languages ensures access to educational and career opportunities.

Conclusion

It seems inevitable that Chinese heritage languages in Malaysia are going to vanish. However, these studies report that Mandarin, particularly the Malaysian variety, plays a fundamental role in Malaysian Chinese communities as a primary language in community events, everyday life, media, and the domestic domain. Is Malaysian Mandarin Chinese then a modern tool to build a sense of a common cultural identity that strengthens local culture rather than an obstacle to heritage preservation?

Francesco Biancalana is a Master student at University of Naples, Italy, and a DDRN intern

Only a limited number of schools incorporate the use of Chinese dialects, and not all schools in Malaysia offer heritage language education, particularly those outside National-Type Chinese Schools, where Mandarin is the main medium. This results in noticeable differences in parental expectations and teaching standards. As noted by Qian (2024:60), “Malay teachers and classmates dominate public schools, while Chinese teachers and classmates dominate private schools. Parents of the two types of schools have different expectations for their children’s future, with children in public schools having more chances of staying in Malaysia to further their education. In contrast, private school students are more likely to go abroad for further studies after high school.” Moreover, access to heritage languages education is uneven across communities. As highlighted in the article, “Tamil medium private schools are largely absent, as the Tamil community often cannot afford this option.” This aligns with Ting (2009:11.8), who reported that “that privately-supported Tamil schools do not exist since the Tamil community cannot afford this luxury.”

Mandarin has become increasingly important in the economic sphere. In contrast to the past “Chinese dialect groups in Malaysia was essential for survival and for business networks” (Ong, 2023:33), Mandarin is now widely used within Chinese communities
for business purposes, making it a valuable asset in the job market.

List of references

What the Black Loyalists Tell Us About America

Adrian Ganic — Mon, 09 Mar 2026 11:31:57 +0000

History can be construed for political purposes, often to the detriment of marginalised groups who find themselves underrepresented in the mainstream narrative. The way history is written also determines which lessons are taken from past events. A politicised historiography risks obscuring the real mechanisms driving history, leading to an inability to act efficiently when old socio-political and economic problems arise in a new form.

One such example is the way the struggle of Black Loyalists—individuals of African descent who fought for the British during the American Revolution (1775–1783)—is overlooked in the dominant historical narrative in the United States.

The American Revolutionary War is often framed as a conflict between freedom and oppression, with the American rebels on the side of freedom—“all men are created equal”, as is stated in the Declaration of Independence issued in 1776.

Such freedom was not the experience for the 20% of the population who were enslaved. Historian Edmund Morgan, in American Slavery, American Freedom, named this contradiction the American Paradox. From that perspective, the equality of the US founders—men like George Washington—and people who looked like them depended on and was sustained by the inequality of their African slaves.

Further complicating matters, Lord Dunmore, the British Governor of Virginia, in 1775 issued a proclamation granting freedom to slaves who abandoned their masters and fought against them. Although Dunmore’s Proclamation only applied to Virginia, some estimates claim that up to 100,000 slaves from all over what was to become the United States escaped to British lines.

For Dr Tad Stoermer, External Lecturer at the Center for American Studies at the University of Southern Denmark (SDU) and Lecturer at Johns Hopkins University, the story of the Black Loyalists highlights the way history can get skewed to serve political aims. In his upcoming book, A Resistance History of the United States, the Black Loyalists are one of the case studies used to show US history as shaped by struggle. Not against outsiders such as the British, but through confrontation with the very system established after the American Revolution.

A Resistance History of the United States

According to Dr Stoermer, the master narrative of the US founding is that the state and the institutions the revolution created—the US Constitution, separation of powers, the Electoral College, etc.—are inherently good because they were founded on principles of democracy and equality; “all men are created equal”.

Both sides of the political spectrum share this view, although articulated in different ways. The conservative reading is based on the idea of Originalism, meaning that legal texts, including the Constitution, should be interpreted as they were understood at the time of adoption. For instance, the conservative-dominated US Supreme Court, in 2022, overturned Roe v. Wade, a previous decision recognising the right to abortion in all 50 states, arguing that in the original text of the Constitution, there is no mention of abortion rights. Instead, the issue should be left to the states. This perspective makes extending rights to previously excluded social groups an arduous task.

Crucially, liberal forces in the US also end up reproducing a version of Originalism. The progressive movement, even while in favour of more expansive rights and protections for minorities, often assumes, like its conservative counterpart, that the state founded in 1776 is, at its core, just. The shortcomings of the system, in this narrative, are due to malign individuals and movements corrupting the original institutions and their purpose. By accepting this “Patriot Myth”, both sides have “created a ceiling on all possible opposition”, Dr Stoermer contends.

This conclusion is not new. In An Economic Interpretation of the Constitution of the United States, the historian Charles Beard argued in 1913 that it is possible to view the US political system as an arrangement designed from the outset to protect the property rights of a rich minority by preventing majority rule and constraining the power of the state legislature from limiting gains on capital through checks and balances.

“So if the institutions are failing, if they are captured, if they in fact are operating against the rights of the people, you cannot escalate outside of them because they are inherently legitimate … All opposition has to get channelled through these pre-ordained, accepted ends. And if they don’t work, then you just have to live with the results. That is not what is shown as having achieved gains in US history,” Dr Stoermer continues.

How have gains been achieved? The argument in A Resistance History of the United States is twofold. Firstly, the book posits that most of the progress in protecting human rights in the US over time has come from resistance to the establishment, not as a result of the establishment’s inherent morality. The experience of the Black Loyalists illustrates that this tension existed from the start.

Secondly, that resistance towards what Dr Stoermer calls abusive authority is a gradual process that begins with protest and legal opposition when a government misuses its authority, escalating if the system fails to correct the injustice. Due to blocking forces within the state, such resistance takes time, and battles over particular rights—abortion, for example—may have to be fought over and over.

The story of the Black Loyalists is also instructive. To avoid re-enslavement, they were evacuated to other British colonies in North America as defeat in the Revolutionary War became inevitable. About 800 arrived in the Bahamas, where they had to struggle to maintain their freedom.

Black Loyalists in the Bahamas

“My main character, for example, Prince Williams, is enslaved. He’s freed by certificate for his military service in the British Army, and then he comes to the Bahamas, and somehow he shows up in a newspaper ad as a runaway [slave]. He has to fight for his freedom a second time,” Dr Christopher Curry, Associate Professor of History at the University of The Bahamas and author of Freedom and Resistance: A Social History of Black Loyalists in the Bahamas, told DDRN.

Prior to the American Revolution, the Bahamas were largely underdeveloped. The settlement of both Black and White Loyalists had a transformative effect. By 1790, several new islands were settled, the colony’s white population doubled (3,500), and the black population tripled (6,500).

Freedom and Resistance shows how Black Loyalists had to adapt their politics and actions depending on their local circumstances—sometimes violently confronting racial inequalities, sometimes seeking out white patronage for personal advancement, acquiring land and even owning slaves. Black Loyalists also established social and religious institutions, such as churches and schools. In fact, we know that Prince Williams eventually regains his freedom because he is listed as an owner of the property that will eventually become Bethel Baptist Church, which still exists today.

Moreover, the Black Loyalists contributed to the political development of the Bahamas. They understood the rights afforded to them as free subjects of the British Empire, using them to protect their freedom and laying the groundwork for deeper inclusivity. “There was a franchise act passed in 1833, allowing persons of colour to get elected to the House of Assembly. The decade-long struggle for that political right would not have happened if you did not have the Black Loyalists, who began the foundational work in the 1780s and 1790s, agitating for their rights in courts, demanding that they be considered free persons,” Dr Curry says.

As in the United States, the Black Loyalists have traditionally been excluded from the mainstream historical narrative in the Bahamas, which instead glorifies the White Loyalists. Dr Curry explains: “Since the White Loyalists were the ones who had access to power, wealth and most of the land, monuments and so on were built for them. Their story got told because they had the power and the opportunities to do that.”

Today, a lot of work is done to highlight the Black Loyalists’ role in Bahamian history. For instance, with the help of Dr Curry and other scholars from the University of The Bahamas, the country revised its history textbook for high schools in 2025. The new textbook incorporates recent scholarship on Bahamian history, with a particular focus on the Black Loyalists and other previously overlooked groups.

Freedom: A Tenuous Process

Above all else, Freedom and Resistance emphasises just how fragile freedom can be. In doing so, Dr Curry says, “it opens an interesting Pandora’s box to thinking about what the American Revolution actually achieved, and how freedom is often tenuous and murky when it crosses transnational borders”.

In the case of the United States, a method for going beyond the Patriot Myth could entail something similar: “If you can engage people in a conversation about what the American Revolution was really all about, you can detach that discussion from an appreciation that this nation-state [the US] is the best way to support those [liberal] principles,” Dr Stoermer says.

The American Revolution was, as the name suggests, a continental—even transatlantic—event, with battles fought in what is now the United States, Canada, several Caribbean countries, Portugal, Gibraltar, Spain, Guatemala, France, Ireland, and off the coast of North Africa. Like other major revolutions, it had many causes and outcomes, the political systems in the Bahamas and the United States being two of them.

Dr Stoermer concludes: “If you care about democracy, if you care about [liberal] principles, then you need to understand that [the US political] structure isn’t serving them. Why? Because it was not created to. That’s the conversation for me.”

Adrian Ganic is a M.Sc., THE LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE and a DDRN CORRESPONDENT

“Why not give all the Money to the Poor?”

DDRN — Tue, 30 Sep 2025 04:30:59 +0000

Lars Buur: Thanks for this opening to the Nordic talk: Just give all the money to the poor? – where we have a very interesting panel. Maybe I should present myself first. I’m a professor in political economy of development here at Roskilde University and I’ve been leading the research program called Cash-In that’s focused on social cash transfers by private managed organizations in Africa, predominantly Tanzania and Uganda. So, I’m a little bit acquainted with the theme of today, but the main experts here, no doubt, will be Miriam Laker and Jacob Ulrich. And I want you to present yourself and maybe come with a brief opening statement. Should we start with you, Jacob Ulrich.

Jacob Ulrich: My name is Jacob Ulrich, and I am currently a postdoc at Roskilde University. And I have done and finished last year a PhD about scaling of social cash transfers, looking at Uganda and Tanzania and globally. And before that, I have worked for many years as a practitioner, you could say, dealing with all sorts of development aid and working 15 years based in Africa, six, seven years based in Eastern Europe and working elsewhere as well. So that’s me in a nutshell. Do you want to move on to Miriam first, Lars, before I start talking about the issues or how do we do this? No, I think that’s perfect because you’re probably the one that knows most about the hands-on of cash transfers so, please Miriam.

Miriam Laker: Thank you, Lars, happy to be here. Jacob, I am happy to see you again after a while. I’m Dr Miriam Laker, I am the Senior Research Advisor at Give Directly, which is an international organization that gives cash unconditionally to people living in poverty. My background is in medicine, medical doctor who was practicing for several years and doing research in the clinical and public health field before I pivoted to the cash field, where I have been for five years now doing work on cash transfers and within GiveDirectly, my role has involved developing randomized control trials, evaluating programs, but also doing implementation science where we translate the evidence that is generated by us and other organizations into the way we practice cash in our organization but also in the way we talk about it in policy and other advocacy spaces so it’s lovely to be here.

Lars Buur: Yes, thank you Miriam and thank you Jacob. Just as an opening statement from my own side kind of setting the scene is that we we’ve seen dramatic changes in the global aid landscape here over the last year. Not only has USAID pulled out from many contracts, but the same has happened with DFID and many of the Western donors. There is a general pressure on aid, and that basically makes the whole question about social cash transfer even more pertinent, as the question is, what should we do with the rest of the money? Should we let global aid or other funding to be spent on social cash transfers instead of the many modalities we use now? And that, of course, raised some bigger questions. And I would just say that there are at least four themes, as we have discussed it, that we will take up today. The first one is related to the socioeconomic impact of scaled social cash transfers. What do we know? Can one actually scale in a sensible and pragmatic way? The second bigger thing is the issue of practicalities and the technology of scaled social cash transfers. How do we actually do it if it’s possible? The third one is where Jakob’s main expertise is probably, about the politics of scaling of social cash transfers. And then the last point that maybe is worth discussing is: How do we move forward if this is an agenda that we should pursue more globally. But first, I want to hear your comments on the first bigger theme about social economic impact of scaled social cash transfers. What do we know about the types of impacts that social cash transfers can do? What is the experience from the field and what do academia say? Should we start out with you, Miriam, because you have some very practical knowledge about what seems to work and not work, seen from your experience with Give Directly. And then we can revert to Jakob as a second point. But Miriam first.

Miriam Laker: Thank you Lars and you’re right, I’ve been exposed to cash transfers in multiple settings, give directly works in has worked in 15 countries around the world, most of them in Africa but also in Asia and in the in the global north which is the United States. I think what has been pretty striking from what we have learned from randomized control trials of cash transfers is that the impact of cash transfers remains the same irrespective of where you are. And essentially, it’s because people living in poverty tend to face the same challenges around the world. The findings have been consistent that when people are given cash transfers, a very high priority on their list is meeting their basic needs. It might be housing, it might be health, it might be food, it might be clothing. And this is not surprising because at the end of the day, when we all work for money, that is essentially what we are seeking to make sure that we have met our basic needs. So, we’ve seen this across the countries that we’ve worked in. But in addition to that, when cash transfers have been in large amounts, people then begin to think about the sustainability of the effects of the cash transfers they had. And so, across the globe, we’ve seen people investing in business. People are starting businesses or people are moving to better paying jobs or people are spending time to better themselves in the angle of education. It might be skills training; it might be getting a better degree or a better diploma. In other words, they are working hard to make sure that they continue to sustainably meet their own basic needs. And once again, what is true about this is that it is the same whether you’re talking about Europe, Africa, Asia, or the United States. The other thing that we have seen is that the duration of the impacts tends to very much be associated with how much people receive. We’ve generally noticed that when you give small amounts of cash transfers, the priority, again, because these are people living in extreme poverty, the priority is meeting basic needs. And then if you don’t have excess, then the small transfers will just be consumption smoothing transfers but once you have larger cash transfer amounts then you have longer term effects and i guess it’s simply because like i said earlier people are investing in things that can bring back an income return and sustain them out of poverty so those are some of the key things that we have been seeing in practice across the globe.

Lars Buur: Okay and Jacob, seen from an academic point and a person who has studied this?

Jacob Ulrich: Yes, I certainly recognize everything that Miriam talked about as well, but maybe I can highlight some of the key points that came out of the PhD analysis that I’ve done together with colleagues from, among others, Makere University in Uganda and also from Ministry of Finance in Uganda and with Michael Noble, former social policy professor from Oxford University. So, we tried to model what would happen if in Uganda, if we were, we, I mean mankind, were to spend a much larger share of the development aid that is available for Uganda on social cash transfers. And we went through a number of scenarios and put the data into different types of economic models, a static tax benefit model called UGAMOD, and also general equilibrium modeling just to double check the data and what we found out is that if we for example allocated around 75 or 80 percent which is an extreme scenario of the aid that at that point in time was available to Uganda, so this is one or two years back data. Uganda was receiving about 2.4 billion USD per year. So, if we allocate about 75-80% of that for social cash transfers in the form of child support, so around $18 per child at the age of 0 to 5 years old per month, so $18 per month per child, then what would happen to poverty figures? They would drop quite dramatically from around 22, which is, or at least at that point in time was the formal the official poverty figure for Uganda to around eight so you can reduce the poverty in Uganda by about two-thirds by allocating a little bit more than two-thirds of development aid for social cash transfers which is an astounding result, it’s quite amazing that how far you could get with just the money that is available. We also did a scenario which was a little bit less ambitious just to say what if we allocate only a third of development aid for social cash transfers. It’s the same scenario, child support $18 a month but only for the children between zero and two years of age as opposed to zero to five which was the former scenario. So, if you do that then you spend about a third of development aid for available to Uganda on social cash transfers and poverty would drop from about 22% to about 14%. So by allocating about a third of development aid for social cash transfers, you could then reduce poverty by about a third, at least for as long as you do the social cash transfers, because then there is the dimension that Miriam is also talking about. Is it a lot of money or is it not a lot of money? What happens when the cash transfers phase out and so forth. But at least for as long as you do this, then there would be that impact. And then we know from other studies from around the world that have looked at a much longer period of time that there can actually and there will most likely be intergenerational impacts for families that are receiving social cash transfers for their children. If they do that in a sustained manner over time, then 10-15 years down the road, when these children become adults, young adults, they will do much better in terms of income and in terms of educational attainment and in terms of general life performance. We know that from studies from, for example, Mexico and Brazil. So, all sorts of positive things would come out of allocating a lot more money for social cash transfers in at least Uganda was the result that we arrived at. And we can then benchmark that with other types of assessments that have been done at a global level. And it matches it. There’s not a conflict between our findings and then the findings of other researchers that have tried to look at how much money would you need globally to eradicate global poverty, maybe around $100 billion per year, which is comparable to the amount of global development aid, which until recently was about 180 billion dollars a year. So, to summarize and to conclude, it would be possible with the development aid that was until recently available at least, to make very big gains in the reduction of poverty, extreme poverty, by allocating it to social cash transfers, mainly in the format of child support. So that was sort of the opening salvo from my side. And then there are, of course, all sorts of ifs and buts and so forth. And we can discuss some of those.

Lars Buur: Thank you to both you, Mirjam, and to Jacob. This of course raises one of the big questions and big discussions that we have seen in the whole social cash transfer discussion and that is should it be given conditional or unconditional and part of this is related to where do you get the best results; what works the best; is it basically to set up certain conditions for how people should use the money. What is your experience from GiveDirectly? And I know that’s not universally for the whole sector, but that you have some very clear and practical results to refer to from many, many different countries. Miriam –

Miriam Laker: Yes, happy to take that question. So, Give Directly’s first value is recipients first. And what we mean by that is that people living in poverty have the same dignity as people that are living in extreme wealth. And so, recognizing that they should be given agency because they know what matters for themselves the most. And because of that, our model of cash transfers as an organization is unconditional cash. But then last, we haven’t stopped at that level of naivety. We’ve gone ahead and done rigorous evaluations. As we speak today, GiveDirectly has run over 20 randomized controlled studies independently evaluated. And these are looking at the impacts of cash transfers among the recipients. And we’ve seen the impacts that I talked about earlier on, we’ve seen that across the board, even when recipients are not told what to do with their money. So that has been a really important finding. And the other thing about unconditional cash transfers, therefore, is that it helps, even ask the practitioners, the donors as well recognize what is important for recipients. I’ll give you an example. In GiveDirectly’s very first programs, when cash transfers were given out in Kenya, a household received $1,000. What was shocking to the founders of Give of give directly and the people working there at the time was many of the recipients improved their houses either they built a new house or improved the roofing of the house and initially that was shocking and the question was is this a bad use of money and so in talking to the recipients we got some very interesting insights. Recipients said first of all if you replace a grass-thatched roof with an iron roof, it is going to be cheaper in the long run because you’re not going to have to replace your roof every one or two years. It’s a one-off and you’re going to have this for a very long time. Other recipients said the advantage of improving their roof from grass to iron to metallic roof is that they were able to harvest water. So, they’re not walking long distances to look for water and they’re getting cleaner water and harvest it directly from their roof. Another recipient said, for them, the peace of mind knowing that on a rainy night, your children are not going to get rained on in the house was a big thing for them. And recently, we published a paper with Johns Hopkins University where they were looking at the incidence of febrile illnesses, malaria, in essence, in places that received cash transfers. And there actually was, according to that, a qualitative reduction in the number of people that had malaria because the roofs were no longer a breeding place for mosquitoes once they were changed. So, by not telling people what to do, we are seeing all these different impacts. Recently we had results that were released from a study in Kenya where Give Directly gave cash for poverty alleviation. And looking back 10 years, we found that there was about a 50% reduction in infant mortality in communities that have received cash. No one told these communities about going to hospital to have their babies, but we saw an over 50% surge in hospital delivery, a reduction in infant mortality of 48%, 45% reduction in child mortality. So in other words, giving recipients the freedom to use their money as they see important drives many indicators of poverty rather than one. And finally, it is cheaper to do unconditional cash transfers because for the conditional cash transfers you need someone to actively check if it affects the condition. If it’s going to school, you need to make sure someone is making sure the recipients go to school and the question is why don’t you just use that money to give it to a recipient and also it is more scalable because as we think about scaling programs nationwide Jacob has been talking about giving 70 or 80 percent of funding to social protection if you’re going to scale something this big the cost of having people check the conditionality doesn’t make sense and then finally also we found that conditional cash transfer programs tend to alienate the most vulnerable because it’s usually the poorest in the communities that cannot meet the conditions that are being set up by the program and those are the premises around which Give Directly and I mean and I believe many other organizations that do unconditional cash transfers used to continue doing cash the way they do.

Lars Buur: We also raised the question about biases. Maybe you have a word on that Jacob because at least many of the rumors around cash transfers are related to temptation goods. Men use it for alcohol there are all kinds of rumors about what people use the money for and they’re not going to be spent correctly or rightly. What does the literature say about this this theme?

Jacob Ulrich: Yes, a good point and it actually relates also to the issue that Miriam was talking about with conditionality or not. So I think the literature is quite clear that poor people, when you give them money, tend to spend it wisely and responsibly. And they do not tend to spend them on what we sometimes call temptation goods, which would be alcohol or gambling or going out dancing or whatever it might be. Of course, you can always find anecdotal evidence, and you can always find cases where poor people spend money, if you will, irresponsibly, as you can with rich people who get money. We might also, from the more developed parts of the world, spend money in a way which we later regret. But overall, the findings from serious studies are pretty clear that poor people do not spend money irresponsibly. They do tend to spend them, as Miriam is suggesting, on immediate needs and immediate needs that are important for their family and for their children. Now, at the same time, the general understanding, and I think that goes for both Africa, as far as we can see from studies, but also from Europe, we are sitting in Europe now, you and me, Lars, is that there is a reluctance in the general population to believe that people, when given money, will spend them wisely. So, there’s a bit of sort of some people call it the belief in productivism. And you can’t just give money to poor people because they will waste them. It’s not going to lead to anything. So, the whole issue of conditionalities that Miriam was also talking about, I agree 100 percent with her observations that you don’t need conditionalities to make people do the right thing with the money. But conditionalities, for example, demanding that the recipients of cash, that they send their children to school or they let their children be vaccinated, these conditionalities can sometimes be useful for the political legitimacy of the cash transfers. So, to convince all the rest of the people that the money is not wasted, these conditionalities can then play a role, but they don’t play much of a role in terms of socioeconomic or the social impact. The evidence is quite clear. People will do the right thing with the money, and especially if they are families, they will do what they can to protect and promote the welfare of their children. So that’s sort of, in a nutshell, what I can say about these biases, if you will.

Lars Buur: It just reminds me about an interview I did with a member from Red Cross who had been working in the Bangladeshi camps and the shock they had from Red Cross when they realized that women used the money on getting big, nice cats. And they thought it was some kind of welfare syndrome until they realized in further research that that was actually the best way to protect their food against rats. So if a family didn’t have a cat, then they would basically be without food. So suddenly what they first saw as a major bias and a need to stop a whole program actually turned out to be something far more important that was actually about food security. But it does raise other questions related to what type of cash transfers are best. There are many things here that have been talked about, unconditional. But what about child support? Or is it focusing on the youth? Old age pensions, short, long-term, sequenced. I know, Give Directly use quite huge amount of money compared to other organizations that have it more small amounts every month or every two or three months. What are the evidence on the different types and modes of cash transfers in this regard? So we start with you, Miriam, you’re trying different things out, but you’re seen from Give Directly, it’s mainly bigger pots of money once in a time.

Miriam Laker: Exactly, yes. So yes, you’re very right. We’ve tried a number of different things, still trying a number of different things, but we predominantly do the large lump sum cash transfer because at the end of the day our ultimate objective is to meet needs that are urgent but also help people get out of poverty and be able to sustain themselves. Our overall goal is actually poverty alleviation. However, we’ve also tried different programs and really depending on the outcome that we’re interested in. For instance, in Malawi right now we have a program that is running alongside Save the Children where the primary outcome is really childhood nutrition and for these, we are giving small amounts of cash transfers and we’re giving it over a period of time, also evaluating using a randomized control trial. But the outcome that we are interested in, in this case, is just to make sure children at the phase of life when they need this extra nutrition are receiving it. We also just launched a program also right now in Kenya that is focused on infant, maternal, and child outcomes. And in this program, we are targeting cash transfers to women who are pregnant. And in this case, we are testing out different modalities this one where we’re giving a lump sum around the time the baby is born or shortly before and another one where we’re giving smaller cash transfer amounts during pregnancy then around the time of child birth a larger amount and then continuing for a few months after the child is born so i think just to answer your question what is important is what objectives someone is interested in. If the interest is consumption smoothing or just making sure that you maintain people at a certain level meeting their basic needs, then maybe the way to go is the smaller cash transfer amount. But if you’re thinking of getting people out of poverty, then probably the larger amounts. One of the things you brought up was old age pension. So, while we haven’t done this explicitly, I believe Jacob may have better insights on this. I think it gets to a point where it is unreasonable to think an elderly person is going to launch a business or is going to spend money on doing some kind of skills upgrade training. So, I believe for older people who are no longer able to do these kinds of things, a pension may be a better way to meet their needs so that for the rest of their lives they are assured of an income that is coming in that can help them meet their basic needs and have something extra. Sometimes a glass of wine there’s nothing wrong with having a glass of wine when you’re feeling good about life so that’s what I think.

Lars Buur: Any comments on this, Jakob.

Jacob Ulrich: Yes, I can follow it, I think that the modality of gift directly of giving sort of large lump sums when we say large it’s large in a sort of a poor african village context, it might be $1,000 or $2,000. We’re not talking about $100,000, which is something Piketty in his book is talking about, that there should be these large lump sum payments for the young generation of Europe of $100,000. That’s not where we are. We’re talking about $1,000 or $2,000. And that can, I agree with Miriam, in many cases be used as a productive investment that can have some permanent or semi-permanent impact in terms of a family building a business for itself or investing in a cow or several cows or doing something that is productive over the long term. I think, however, that there will also be many cases where that does not succeed, where people will make the investment, but it will not lift them out of poverty in the medium to long term. And I think the evidence would suggest that while that approach of Give Directly is useful in many cases, you can also find good arguments why it would be advisable to have sustained cash transfers over time, for example, child support, so that you go in and you give such as we have modeled for Uganda or such as it has been done in reality in places such as Mexico and Brazil and South Africa, where you give child support on a monthly basis for a long time until the children are at the age of whatever it might be, 12, 15, 18 years old. And then you will see a sustained impact in terms of intergenerational impacts that these children will actually do better than they would otherwise have done. So, I like the combination of something biggish and lump sum upfront, and that will help some families move out of poverty. And then also having this kind of a safety net, which is more permanent in the form of durable child support over a period of say 10 years or whatever it might be. So that combination might in many settings be quite helpful.

Lars Buur: Yeah, I think it’s an important agenda in that sense also to get beyond the issue of poverty alleviation, because one of the critiques that has been there from a more productive camp and from people who want to see transformation of the economies in manyof the developing countries is that it does not do anything to the productive basis of the society. People are basically maintained in a form of poverty. So, you just make it more doable to be there. So, this question about how one make it productive in a greater sense and actually transformative, is an important agenda. And that basically allows me to move to the second bigger point, I think, of today’s agenda and that’s related to the practicalities and technologies of scaling social cash transfers. How to do it? There are many new technologies at stake, many modalities that are tried out, but the first big question in this regard is, you know, what does technology mean for social cash transfers? Many of the first cash transfers was basically done in kind, then became cash and now it has become e-money in different forms. So with mobile banking, mobile phones, mobile networks, there are all kinds of different modalities at stake. So, what is the experience from Give Directly on this issue of the and this transformation of in the way you provide cash? Can you first speak to this Miriam?

Miriam Laker: Yes, I’m happy to speak to this. So sometimes when I sit back, I think about Give Directly and technology and they are so intertwined that I almost think without technology, Give Directly would not exist the way we know it. So, for Give Directly, technology has been a huge enabler because even while you say, and we all know that technology is advancing really fast, this is happening in many parts of the world. In most rural parts, we are still basic. And so Give Directly, in most of the places where we work, has taken advantage of the most basic mobile phone technology available most of them are not banks they do not have bank accounts in the traditional banking mechanism we now have at least a basic cell phone basic cell phone coverage and then we also have a mobile money banking which is really banking in an individual’s mobile phone using the mobile phone and telecom providers. So, Give Directly has taken advantage of that and all the cash transfers that we do are through mobile phones, mobile money platforms. We go out to a community, talk about mobile phones, train people in the community how to use phones and for many of them it is the first time they are actually seeing and having their own phone and we’re training them on how to use that. We are getting them registered into mobile money, in other words opening up a bank account for them in the mobile money platform showing them how to use it how to make sure that it is safe

in getting money out and how to use it for their regular lives so that is the first thing that we do. The cash is then sent directly to their phones and they’re able to access it but another layer that technology has given us in this work that we do is that technology has helped us want to monitor so we have toll-free call center numbers. The other layer that technology has provided for Give Directly is that it’s enabled us to keep in touch with our recipients remotely because we have toll-free call centers where the recipients now with the cell phones we’ve given them are able to call us anytime to talk about anything related to the cash transfers, whether it’s how to access it, whether it’s safeguarding issues, whatever it is, they can call us for that. The other thing about technology is that it helps with transparency and auditability. You know where every coin has gone, to whom it has gone, when it was received. So if anything is diverted, we are able to immediately track and catch it so those are the great things that it’s done but at the end of the day it has also really heightened the efficiency of cash transfers because at the moment about our efficiency is 80 to 85 percent meaning for every dollar that we get as an organization from donors 80 of it or 85 of it goes to the recipients and only 15 is for all our overhead costs simply because we don’t have people physically going to a bank, picking up money, driving out to the community, or buying in-kind goods to give to the recipients. And finally, on this topic, I think that speaks a lot about the ability to scale these kind of programs. We are never going to live in a world again where people do not have access to cell phones. It is just increasing. It’s getting more complicated but also more available and that actually then means that this method of delivering cash to people who need it is very easily scalable, and I don’t see anything happening to take us back to a place where we don’t have this kind of technology.

Miriam Laker: Okay, I think that my observation from the other players is that they’re mainly infrastructure development groups when you look at China they’re working on roads you look at JICA Japan they’re working on things like the health system, education system. It’s a very strong infrastructure. It’s more infrastructure-driven assistance to many of the countries, at least in Africa, where they are assisting. And I think this brings us back to what I was saying. If this group of people are focusing on infrastructure, then finding other means to make sure cash transfers are sent out will therefore increase the demand on the infrastructure that is being built up in the countries, that is being built up in the countries that uh that are being that is being built up in these countries but this is like really theoretical i don’t know what the practical solution to this is going to be Jacob, you might be better than me or maybe not, I don’t know but I would think that if we look at this sort of the four major powers if you will so we have Russia we have China at large with the rest of Asia, and then we have Europe, and then we have the United States, right? So, where it used to be that United States and Europe together would be the big boys when it came to development aid and would be somewhat aligned, and both would be interested one way or the other in social cash transfers, now we have the US dropping off, which leaves Europe and China with the rest of Asia, so to say, and then Russia as some of the major players in Africa.

Lars Buur: It’s a very interesting point but there’s also some critique of these e-money ways of operating particularly when they get so to say, nested or embedded in all kinds of debt provisions, loan options, etc., etc., that it can be a way of indebting rural people or poor people. There is some experience from South Africa. Can you speak to that, Jacob?

Jacob Ulrich: Yes. Well, true, as Miriam was saying, and I can confirm that from having studied at least some of the literature. Yes, technology is a great enabler and it has really been a game changer for social cash transfers across the world. But it does also come with some danger. So there was a case in South Africa where they are very advanced with their social cash transfers, but where a private operator was brought in to manage the whole system. And that private operator was a financial institution that then got access to all the poor people receiving, poor or not so poor people receiving social grants and could then market their payday loans to these same people and convinced a lot of them to take these sorts of payday loans or loans with very high interest rates. And then all of a sudden, these people found themselves, the recipients of the cash transfers found themselves in a situation where the money that they were getting every month from the government child support, old age pensions whatever was immediately went into their account but it was then immediately transferred to pay back the operator of the system with a very high interest on the loans that they had sort of had stuffed down their throat right so that was that was fixed then.

in South Africa and that operator was not allowed to continue operating like that. But it is an indication that one needs to be on one’s toes in terms of who is allowed to operate and implement these programs. And what is the role of big finance, big international finance, big financial companies, big tech companies and so forth? They’re not all of them benign, although the general experience is very positive.

Miriam Laker: Lars, do you mind if I could jump in at this point?

Lars Buur: You’re most welcome.

Miriam Laker: Thank you, Jacob. Thank you for sharing that. It’s almost scary to think about it. And I think I just need to clarify something at this point. So, while we all understand that people in poverty know what is best for them, I think we should not be naive enough to think everyone knows how to deal with technology when it shows up. And so, it’s really important that the upfront engagement with the recipients to tell them the potentially fraudulent activities that could happen as a result of them receiving these large cash transfers or any amount for that matter. It doesn’t have to be a large cash transfer. Simply the fact that they’re receiving money puts them at risk for fraud or even for violence. So, I think that makes it really important. In Give Directly, what we do as the program starts off, we actually meet the entire community and try to have these conversations with them. So, while there’s excitement that there’s this money coming out, we go back to reality and say, you know, these are things that could happen. How do you safeguard your pin? How do you withdraw your cash? When do you withdraw it? So, I think that is really important. We haven’t experienced what Jacob shared, but I think this is really important for us as an organization as well, because as we grow as an organization there is a likelihood that we could get service providers who end up trying to defraud our recipients that way, so Jacob thank you for that learning point

Lars Buur: Yeah, it raises a question about yes you provide the cash but who should be the recipient, should it be old people which we suppose are more responsible, it’s not always the case should it be the young ones that know how to operate these technologies? So, when you stand there in a situation with Give Directly and you need to provide the money and you do it electronically, how do you decide who gets the money and who does not?

Miriam Laker: Yeah, so when we go to a community, our recipients are primarily adults who have their mental faculties in order and are healthy and not bedridden for that matter. So all those, and that’s a majority of our recipients. However, we’ve had situations where we’ve given cash to a household where the primary recipient is either very elderly or chronically unwell, or there have been cases where the head of the household is actually under the age of 18. In those cases, for safeguarding purposes we get a trustee in the community. So someone who can be a trustee, someone who is trusted by that household and to the extent possible someone who is known by the community leaders and that person becomes a person through whom this family receives cash transfers. If the person is under 18 then the trustee will be the recipient on behalf of the family and in that case, we have a safeguarding team checking in with the family each time cash transfers come to make sure they’ve received the cash and the amount that they should have received. If it’s a person above the age of 18 and for whatever reason, they are not capable of receiving the cash themselves, the transfers are sent to their phone, but they have a trustee who helps them withdraw the money. So that is how we have done it overall, but we have a very strong safeguarding team that will, for the duration of that project, keep their hands and their eyes on what is happening in that community.

Lars Buur: Do you directly have any experience with doing cash transfers in situations of conflict? Because now as we see cash transfers being used by the humanitarian sector to a far larger degree, this suddenly becomes an important aspect because the whole issue of trustees, the whole issue of operating systems and maybe a backup and checkup is more difficult when you are in conflict situations. That is true. This first from Give Directly and also Jacob, what do we know about this more generally?

Miriam Laker: That’s a very pertinent question we’ve done cash transfers in the context of conflict in two ways one where we are remote for the from the conflict in other words refugees that have moved to a safer space that is quite easier to do than in places with active conflicts we’ve done active conflict zones in Yemen and the Democratic Republic of Congo in those situations the efficiency of our programs go down because they’re all the security issues that are involved as well. But we have done it successfully. Of course, it is more complicated. You have more safeguarding issues, so you need to have a stronger safeguarding management presence. But also, it is still one of those areas where we are learning. We have like an active program, for instance, in the Democratic Republic of Congo, where people have been internally displaced. They are still very close to conflict. And so, we are running that program and trying to evaluate it. What or how do these people use their money differently? Are there extra saving safeguarding issues that they experience as a result? How easy is it to continually get cash transfers to people when they have moved away from the place where you first encountered them? So as an organization, we are very passionate about doing cash, even in the setting of conflict, because we shouldn’t exclude people because of circumstances that they have, they have nothing to do with but we need to learn how to do it correctly in places like that so those are some of our hardest programs to run at the moment.

Jacob Ulrich: I do not have so much on how to do it in a conflict situation. Miriam knows much more about that than i do but one for me at least interesting fact if we distinguish between humanitarian assistance and then more long-term development assistance, it’s actually humanitarian assistance that sort of started out the whole cash transfer thing to some extent. And about 20% of the funding that is allocated for humanitarian assistance is actually allocated for social cash transfers. So, there’s been a lot of positive learning from that, from funds being given as social cash transfers to refugees in refugee settings. And the reason is simply that it’s much easier to give people cash and then they can provide for their own needs by buying whatever they need in the market, rather than as an organization having to provide food and shelter and all sorts of in-kind contributions when you can just give the cash. So that’s an interesting sort of humanitarian aid came first and then development aid is catching up based on the positive experiences. So, there’s some sort of a nexus there that has been interesting to study historically.

Lars Buur: Thanks. This raises another question seen from my point of view related to governments where you’re working. Do social cash transfers need to go through government systems, or can they be provided in parallel? There are all kinds of questions related to social contract dynamics, there are all kinds of questions related to taxation, directly or indirectly. What are the experiences from Give Directly on how to work with governments in relation to cash transfers?

Miriam Laker: One of the things that excited me most when I met Jacob was the fact that he was looking at the government arm as well. Because personally, I believe while it is great for NGOs and other people to do these programs, the ultimate goal should be the sovereignty of a nation. There should be a point at which after evidence has been generated and the implementation mechanics have been figured out, that programs are handed over to governments to look after their people. So, I loved Jacob because of that. As Give Directly, over the last five years we’ve begun to have stronger government engagements and because of this we actually now have a policy department whose purpose is actually that. So having conversations with government about one, the evidence of the programs and as much as possible we try to align the programs or to identify outcomes that are aligned with what is important in a government’s development agenda and so presenting to them the evidence first of all and then going through how we actually did implement the programs both from the operational perspective but in this case things like safeguarding are very key as well so we have those conversations we’d also started having conversations with government on how to develop their own technical systems to be able to do the cash transfers themselves through their own through technology that is overseen and run by the government so hopefully ultimately all programs should be handed over to governments to run this because when governments are running this they know how much it costs they know who is receiving cash they understand the population better I think the role of NGOs is to fill in gaps that the government needs to be filled but ultimately these programs should be transferred to governments. I know it is much more complicated because governments change quite frequently. Issues like safeguarding, many times governments struggle to make sure that they’re ensuring that safeguarding is in place, which is a key issue with cash transfer programs. But I’d love to hear from Jacob what you have learned in the course of your PhD related to government.

Jacob Ulrich: Yes, I can respond to that. I think for me, doing this analysis has been like black and white or night and day in terms of socioeconomics on one side and then politics on the other side. So, socioeconomically, as we have discussed, it’s a great thing to do scaling of social cash transfers, finance with development aid, if the objective is short-term or long-term poverty reduction. No doubt about that. Politically, it looks much more difficult. And it’s almost a conclusion, but not quite, but almost a conclusion, this is never going to happen, right? Because it’s politically very difficult. And if you look at it from the government perspective, and again, I did some case studies in Uganda, but you could make parallel analysis elsewhere. What would the government think if someone came to them and suggested that you should take most of the aid that they’re receiving and just hand it out as social cash transfers to as child support or old age pensions or whatever. Well, there will be at least two three reactions one is there would be a skepticism and which is healthy in terms of is this really the best way to create economic development for our country shouldn’t we invest the money in infrastructure or in health or in building businesses or whatever and i think a case can easily be made that investing in social cash transfers does actually promote economic growth because it creates demand in the medium to long term and the short term as well. So, but that’s the first skepticism that you would be met by from government. The second skepticism relates to what you could call political legitimacy or patronage or social contract. I mean, the government is currently or Uganda as a country is currently receiving its development aid, $2.4 billion a year in a way which sort of promotes or at least secures some sort of political stability, right? And if you were to change that quite dramatically, then you would rock the boat. And what would then happen with political stability? And in particular, if we imagine that this was to be a success, so we took a major part of development data and allocated it for, for example, social cash transfers in the form of child support, and you would then end up quickly with a positive social contract that the government would be able to say to its people, we have negotiated with the donors that all that money that used to be spent on something else and was perhaps a little bit less productive, now it’s given to the mothers of Uganda for child support or whatever. It could very quickly become quite popular. And that would put the government at risk because what happens if the government and the donors end up in a conflict or in some kind of disagreement? And all of a sudden, the donors would decide that now we need the money for something else. We need the money for stuff in Ukraine, or we need the money for other priorities that we have elsewhere. Or what if the donors just disagree with the government about something? I mean, there’s been a law on homosexuality, for example, quite recently. There might be a corruption scandal, you know, something, where the government would then be at risk of the donors pulling their support quite quickly. And that would then impact negatively on the deal, the social contract, so to say, between the people of Uganda and the government of Uganda. Because people would say, between the people of Uganda and the government of Uganda, because people would say, ha, we used to get child support, but now the government did something with the donors and now we’re not getting child support anymore, right? So the government would be understandably, rationally concerned about such issues, which means that you would have to have some sort of a different aid structure and more long-term commitments so that the government could count on it and the people of Uganda could count on it, then it’s not something extremely temporary. So that’s on the government side. The government would also most likely, and again, it’s very rational, insist on the money flowing through the government systems. Why would you have that much money flowing through, say, NGOs or the UN system or some other entity? It’s quite natural, you could say, for a government to want to control such money flows, which is happening in its own country. So, there would be some resistance, which would require some different aid modalities and a rethink of how donors and government cooperate. And then the whole thing of dramatically changing international geopolitical landscape right now, as Lars talked about in the beginning, that further complicates things. So politically speaking, it’s not super straightforward, but it is certainly doable. And you could see the advantages of everyone, also of the government, if this was done the right way. Maybe I’ll pause there, Lars, because otherwise I’ll speak forever.

Miriam Laker: Can I jump in, Lars, just quickly? Yes, I’m going to share a similar example from the health field that I think is an experience we could think about for cash transfers. So in the health field for HIV in particular, the money, the donors and the governments worked, it’s essentially in parallel, money that was sent for HIV care from places like PEPFAR did not go, most of it did not go through the government, they went in through the NGOs. And because of that, when the relationship broke earlier this year, we all know what happened in the donor space. The social contract wasn’t broken between the government and the people. People say the donors have pulled out and that is why we don’t have money for treating HIV now. I think that was a very smart way of doing it. So the HIV donors avoided the risk of sending all their money through the government by having organizations that they had faith in deliver the services with government oversight and so when the relationship ended the government has come out looking good people say okay government you should have provided something to in the event of something like this happening but the blame actually in when you go to all these African countries is on the donor and not in the government. I think that was a very smart way of doing it i don’t know if it could happen with the cash transfers as well.

Jacob Ulrich: Yeah, I guess it could, but it depends very much on the context, I would think, because it’s pretty clear with the HIV AIDS funding and PEPFAR disappearing, that was essentially President Trump and Elon Musk, right? Everyone could see it. But what if it is something else that generates that the donors would pull out of child support? For example, a disagreement with just Uganda. I mean, for the HIV AIDS, it was all of Africa. Everyone could see. You can’t blame the government for that. But in the other situation, maybe some people blame the government. But it’s not a straightforward situation, but it’s something to reconsider. Yeah, you bring up a good point.

Lars Buur: Yeah, there’s no doubt that if one was to scale, it would change both how NGOs operate, but also how States operate in relation to the cash transfers, because they need to set up systems that allow for it to happen. And that would in itself make major leeways into how many governments operate. That’s clear. We can see that with the NGOs that are moving, particularly in the humanitarian sector, that these NGOs that have moved from providing in-kind to cash, they have had to change the whole departments of procurement before going out buying mattresses or blankets to suddenly negotiate very technical contracts with mobile operators and banks, etc. It just changes the organizations. And I think that will create a whole ripple effect of changes, both in relation to the NGOs and the States, if they were going to scale in that sense. But is it feasible to actually scale? Is it just a pipeline dream you have, Jacob, and to say, give directly?

Jacob Ulrich: Yeah, I think, well, technically, it’s entirely feasible. I mean, it’s almost super easy. I mean, it’s not hard to do it. You know, it comes with all sorts of complexities, but we have certainly seen that it’s very doable. And it happens already, not with donor funding, but with government funding in places like Brazil and Mexico and South Africa. So yes, it can be done. The only difficulty is on the, or the major difficulty is on the political side. And we’ve talked a little bit about the political side with the domestic government, say the government of Uganda, there would also be issues on the donor side, because what is the purpose? What is the reason that we give development aid? Well, technically speaking and officially speaking, the purpose of development aid, at least the part that we give for Africa, is mainly aimed at doing something about economic inequality and poverty reduction, right? That’s the official purpose. But the real purpose, unofficially and increasingly also officially, is that donor aid is seen as yet another tool in the geopolitical toolbox. So, it’s something that we give also to promote our own national interests. So, we worry about geopolitics, we worry about climate change, we worry about migration from south to north, we worry about regional and international terrorism. We worry about the future of our businesses. So for the donors to be, or the donor countries to be interested in dramatically increasing the share of the funding that goes to social cash transfers, I think it will be necessary to argue credibly that social cash transfers do not only lead to reductions in poverty very effectively, they also have positive implications for those other issues that are important to us, including, as I mentioned, climate change, international migration, international security, and our business interests. So that sort of indicates that we need to shift the dialogue or the analytical studies of social cash transfers a little bit in the direction of what can scale social cash transfers do for geopolitics, instead of just what can scale social cash transfers do for geopolitics instead of just what can scale social cash transfers do for global poverty?

Lars Buur: Any comments on this, Miriam?

Miriam Laker: Okay. I agree with Jacob. I think while, yeah, so agreeing with Jacob, so while technical evidence is necessary and impact evidence is necessary, it is not sufficient bought in. For Give Directly, we are scaling there. We have the ambition of covering the entire country. In Malawi right now, we are giving cash transfers to an entire district. So we are moving from the little villages to an entire district. But what is really important from my experience with Give Directly in the realm of politics is aligning with what the government believes to be important. And we have tried that a lot, looking at what the government vision is in the area of development for their countries, poverty alleviation. What is the government’s vision, for instance, in Uganda and Kenya about refugees? So, we’ve tried to do that a lot and then presented to them the evidence of what has worked. So, we say this is what you have tried and we are presenting to you something that might work if you tried it. And we’ve got quite a bit of buy-in as a result of that. Also, with organizations like USAID before it closed, doing a randomized control trial where we’re comparing interventions, for instance, water, sanitation, and hygiene, and nutrition, and comparing that to cash. Does cash move the same outcomes to

Dialogue between Dr. Miriam Laker and Postdoc Jacob Ulrich moderated by Professor Lars Buur

https://ddrn.dk/wp-content/uploads/2025/09/audio1024870099publish.mp3

Also read: CASH-IN and From Consultancy to PhD research at Roskilde University – interview with Jacob Ulrich

the same extent or cheaper than the interventions do? And we actually got a lot of buy-in from USAID. Last year, we got a lot of USAID funding, which unfortunately has fallen apart because of the circumstance. But so what I’m trying to say is, while it is great to have technical evidence, impact evidence, it is very important to align with what the governments see as a priority. The other thing we’re doing right now in Kenya is an alignment of showing the government that giving cash transfers actually increases demand for infrastructure that already exists. The example I gave you is the infant mortality study where we saw the infant mortality reduction because of uptake of services that the government already had in place. So, in other words, we are improving on the investment that they’ve already had on this infrastructure simply by giving people cash transfers. But at the end of the day, like Jacob said, this is a long walk. It is not a sprint. It’s a marathon. And we just keep taking the wins as they come and using them to advocate for bigger uptake across countries.

Lars Buur: What has been the impact of the closing down of U.S. aid? We know that U.S. money is still flowing into countries related to the security sector in relation to other sectors.But the general impression is that the U.S. aid, as we knew it has more or less been closed down. What has been the impact seen from the side of where you are deeply engaged with the Give Directly in different country contexts?

Miriam Laker: Yes, so Give Directly was not immune from the impacts of the closure of USAID because like I said over the last one year they had become major or key donors in Give Directly and so there were a number of programs that we had to close because we didn’t have the Give Directly, I mean the USAID funding. We actually did close one of our countries which was Morocco where our programs were 100% funded by USAID. However, on the positive side and this is a commendation to people who have been donors for the programs that we run as Give Directly and other organizations as well. Their donations were able to fill the gap that USAID left because we had promised recipients cash transfers and now we couldn’t go back and tell them, oh, unfortunately we do not have money coming in. So the donations that we got from other donors were able to be a stopgap measure for the programs that were stopped going forward. The other thing that I think this, the closure of USAID has done has given us time to also think about cash transfers compared to other modalities of cash transfers or of giving aid. We foresee that there’s going to be a time when we are going to have some changes happen. And I feel at the moment that the fastest way for us to meet the gaps that have been generated by closure of USAID is giving cash transfers. Like once again, I said in the beginning that the advantage of cash is that a single transfer will meet multiple needs. So, it will meet nutrition needs. It will meet health needs. It will meet agricultural needs. It will, like multiple needs will be addressed simultaneously. And I think that is a gap that cash transfers can now begin to take up in the development space.

Lars Buur: Okay, that’s very interesting. How does this relate to the wider geopolitical reconfiguration that we see at the moment with China becoming far more important in many of these African countries? We also have Russia coming in with the Wagner Group or whatever the name is at the moment, particularly in some parts of Africa and the European Union trying to find a different way of operating because they are aware that they cannot operate in the same way as the Americans or the Chinese, etc. How do you see this? Is it possible to tap into some of these other geopolitical players and operate? Or is it you as a U.S. organization? Is this more or less a closed field where you had to rely on Western donors in US.

Jacob Ulrich: Or maybe not, I don’t know but I would think that if we look at this sort of the four major powers if you will, so we have Russia we have China at large with the rest of Asia, and then we have Europe, and then we have the United States, right? So, where it used to be that United States and Europe together would be the big boys when it came to development aid and would be somewhat aligned, and both would be interested one way or the other in social cash transfers, now we have the US dropping off, which leaves Europe and China with the rest of Asia, so to say, and then Russia as some of the major players in Africa. We’re talking about Africa. I think as you are both alluding to, it’s very difficult to see Russia and China and even JICA or some of the other Asian countries moving into social cash transfers. That’s just not their thing. And it doesn’t reflect fully the sort of historical legacy that they come with. We come from Europe with much more of a legacy of the welfare state and we are much more familiar with this whole notion of cash transfers in having multiple purposes that are both social and are useful in terms of securing political stability and building sort of a key social demand or economic demand and so forth. So, I would think that we can actually, if we want to from Europe, we can stick to and further build our ability to engage with social protection systems at large in Africa, including social care transfers, and then leave some of the more infrastructural investments to the likes of China. I wouldn’t say we should leave much to the Russian Wagner Group, and I wouldn’t count on us getting much in terms of development aid or development interventions from the United States in the short to medium term at least. So that still leaves, we can actually, if we want to from Europe, we can say, let’s be the ones who are leading this large niche of social protection in the Global South together with Global South partners. I would think that that could actually be advantageous for both parties.

Lars Buur: And particularly seeing this, one see and look upon this from the point of view of the Nordic talks. Some of the major international donors has been Denmark, Norway, Sweden. There’s been a lot of changes there. There could be a new alliance if one got it formulated in a strong way. What would be the main challenges? Because to be honest, when we talked about long term, short term, donor aid is generally project based, short term. Yes, we formulated control programs that ran five years but used half of the time on evaluation and the other half on formulating new programs. So, so, so that would really, really require a change of the whole way. The whole aid mentality, wouldn’t it?

Jacob Ulrich: Yes I think I can maybe give that one a go it was one of the issues that i was interested in and that i have analyzed as well yes if we are to move into a situation where a major part of development aid is used on or invested in social cash transfers then that would require new modalities especially a more long-term way of thinking because you can’t just go in and do social cash transfers with a three-year perspective at scale. Then you need a longer perspective. And the major obstacle, I would think, that even for Europe, but also for the other geopolitical players that I talked about before, the whole security situation, which is up in the air, requires us to invest a lot more in defense and military expenditure. We are now moving towards 5% of GDP in Denmark to be spent on defense, which is a lot. We used to be like 1% or 1.5% with the objective of sometime reaching 2%. Now we are actually reaching 5%. And there’s been some of the same discussions and decisions made in, for example, the UK, where they have also reduced their aid budget quite dramatically and with direct reference to the need for spending more money on defense. So, the whole security situation is a major obstacle. I think realistically speaking, this idea of spending a lot more money on social cash transfers in the immediate future, that’s unrealistic. But one can still prepare and game up, so to say, and be ready for when geopolitics change and one part of that can be to explore and investigate and argue how increased investments in social cash transfers in the global south can actually be helpful in terms of building global security as well right so that’s that would be some of the strategic choice one would need to make if one wants to push this agenda sort of in the medium to long term.

Lars Buur: And seen from your perspective, Dr. Miriam Laker, how do you see this field? Is there space for expansion, for scaling?

Miriam Laker: Yes, I want to be optimistic and say there is space for scaling, because one of the common questions is where will this money come from? We estimated as an organization that it would take about $100 billion per year to end poverty. The World Bank says it might be 200 billion if you include things like administrative costs. But the reality is that the money exists. When you look at what wealthier countries and even wealthier parts of Africa spend on things like looking after their pets or cups of coffee, that money actually does exist. And I think it’s going to be important to appeal to people who have money to contribute, to donate to this cause, that’s the first thing. I think that is very important. The other thing is for the players in this field to not work independently of the governments, of the policy makers. Like we’ve said, even when you have technical and impact evidence, if you don’t have buy-in from the politicians, it is not going to happen. And I think that as we run these programs, getting them involved from a very early phase is very important hearing them out what is important for you as a government in your five-year tenure what do you want to achieve and how do how can cash transfers then play into that i think are going to be very important conversations to have from early on but continually as well i really believe that this is a way to go cash transfers i hear we have evidence that has shown that it works and we just need to find a way of working together with the key people that are needed in making the decisions for scaling going forward. I am very convinced that this money, even without USAID, exists in the pockets of people around the world.

Lars Buur: Thank you. One last question in this regard. Give Directly has shown one way of working. It’s still in the bigger scheme of things, small. How could one organize this field, Jakob? I know you have been looking into different possible models or modalities or ways of setting up a more global push for social cash transfers.

Jacob Ulrich: Yes, and certainly not only me, but there are also others that are more advanced than me in terms of setting up some structure. For example, the ILO has been much involved together with others in promoting this kind of an idea of having a global social protection fund that money would go into. And one could imagine that if such a global social protection fund was established and if a number of players, be they private, as Miriam is partly suggesting, or be they governmental donors. If money was put into this kind of a global social protection fund with a long-term mandate to do something about social protection and cash transfers, social cash transfers in the global south, then money from such a mechanism could be allocated, for example, to similar vehicles at national level, so you could have the Uganda Social Protection Fund or the Kenya Social Protection Fund or the Tanzania Social Protection Fund, which would be operated as something that would be controlled partly by governments, partly by donors, partly perhaps by NGOs or by respected people in the national community, and would provide some kind of a long-term dependable mechanism for financing long term investments in social protection to minimize the risk of someone taking the money and running with it, and also to minimize the risk of donors pulling out from the funding too early or other finance actors pulling out prematurely, if you will. So that’s some of the ideas that already exist out there and which I think could be useful to elaborate further.

Lars Buur: Would you see yourself in such an aid scenario, Miriam, in such a global front? Would there be space for you or would you basically crowd out organizations like yours?

Miriam Laker: That’s a good question. You know, one of the things we say in Give Directly is that we should be like medical doctors, essentially working yourself out of the job. You want everyone to be healthy so that doctors don’t have to work. In the same way, we want the world to get to a place where you don’t need organizations like Give Directly. And I think one of the things that I think the listeners should think about is when a cash transfer program is done well, you’re actually reducing the burden, the number of people who need cash transfers. Jacob talked earlier on of children who grew up in households that are receiving cash transfers eventually getting a better education and better income, meaning they will not be recipients of future social protection or cash transfer programs. We’ve seen with the large lump sum programs that the people who do in fact graduate out of poverty and evidence has shown that people who are not born in poverty are less likely going to be in poverty as well. So, at the end of the day, I think we need to remember that if we do programs that have been shown to work, there’s a likelihood that we will reduce the burden of social protection. There’ll be fewer people who need to be on social protection or these cash transfer programs. But I think that what we need to do now is begin to implement what we’ve learned as we wait to get to a place where the governments, the donors and everyone is working in sync. At the moment, we have a critical mass, and I think we should be starting and pushing the agenda in any forum that is provided to us.

Lars Buur: I would say thank you to Dr Miriam Lekker and to postdoc Jakob Ulrich and then hand over to the Danish Development Research Network.

AW: Thank you very much. Just allow me one short question here at the end. I mean in your opinion how receptive is the Danish government I mean in its development aid policy to cash benefits and maybe if you know about the other Nordic countries now we’re having this Nordic talk how receptive are they to these ideas which i find very interesting and important

Jacob Ulrich: Yeah, I can start with my response. I don’t think that major investments in social protection are something that is being much discussed in Danish government circles in relation to development aid, but it is a growing field, there is a growing interest. I myself have been doing a couple of presentation, one in the Danish Parliament, one in the Ministry of Foreign Affairs. People are listening, but it’s not something where we have sort of a huge portfolio of programs that we want to expand. So, we’re starting from a sort of a relatively limited space, which is sort of in a way surprising and I don’t have a good explanation for it because we are such a welfare state country. So why have we not over time invested more in spreading some of these welfare state ideas with child support and old age pensions and unemployment support, all of that stuff. Maybe part of the notion has been that those types of services are something you can afford when you’re a middle-income or a high-income country. And until you have become a middle-income country, you should focus on something else. But I think as we have discussed in this conversation here, you don’t need to wait. So maybe there is further space for the Danish government to engage.

Lars Buur: Can you experience, Mirjam, seen from an African context of the Nordic countries and their engagement after USAID pulled out?

Miriam Laker: I think from my perspective, so we actually haven’t really got funding from the Nordic countries. We’ve had conversations with organizations like NORAD. We’ve had presentations in Germany, like the Freiburg Institute of Basic Income Studies as well, but not much engagement. But they are curious to know about how we are running cash transfers, the evidence that we are finding. But interestingly, one of our key donors that give directly is IKEA. IKEA is from one of the Nordic countries. So very interesting. They are supporting a lot of our refugee work in Kenya and Uganda, but nothing from the government yet.

Lars Buur: Thank you and over to you.

AW: Yeah, thank you very much, it has been the most interesting dialogue and we will definitely follow your future work and cooperation, I think it’s very exciting, this talk.

Why People Send Remittances: Lessons from Cuban Communities Abroad

Adrian Ganic — Mon, 29 Sep 2025 12:11:41 +0000

Approximately 1 billion people rely on remittances—money sent by migrants to family and friends back home—to support their livelihoods, according to the International Fund for Agricultural Development (IFAD). The total value of global remittances to low- and middle-income countries was $656 billion in 2023, more than foreign direct investment and official development assistance combined. Yet, even though many people depend on them, and although remittance flows have increased by 500% over the last 20 years, remittances remain a peripheral area of research within the broader field of migration studies.

Among other things, scholars have examined how remittances influence economic indicators such as growth and investment capacity. Moreover, it has been observed how remittance flows not only transmit money but ideas and norms between receiving- and sending-country communities—so-called “social remittances”, first articulated by American sociologist Peggy Levitt in a paper published in 1998. Remittances’ effect on institutions, and whether remittances spur democratisation or strengthen authoritarian regimes, is also heavily debated. What these distinct strands of scholarship have in common, however, is that they overwhelmingly focus on the impact of remittances on recipient countries, sometimes referred to as the migrants’ “home countries”, or on people living there.

Denisse Delgado, a migration specialist and Adjunct Professor at Georgetown University and American University, Washington, D.C., has sought to address the lack of focus on individuals in sending countries. In 2024, she successfully defended her PhD dissertation titled Remittance Behaviors Among Cuban Migrants in Miami and Madrid: Motivations, Practices and Experiences, which explores remittance attitudes and practices among Cuban migrants living in Madrid and Miami. Dr Delgado’s research comes at a time when debates around migration in the United States have held centre stage for some time, with previous Republican and Democratic governments both in favour of tightly controlled borders. Since Donald Trump’s re-election in 2024, such policies have been further entrenched and escalated.

While attending the 4th International Forum on Migration Statistics (IFMS) in Malmö, Sweden, Dr Delgado sat down with DDRN to discuss her research and how the Cuban case informs the wider remittance literature.

Highlighting the Cuban Diaspora in Madrid

On why she chose to study Cuban migrants, Dr Delgado points out that “there is very limited information on Cuban migration and even less about remittances, so there is a gap in the literature that I think is valuable to fill. The other aspect is that being someone who was born in Cuba, I personally feel motivated to explore how families connect while living in different countries and across large distances.”

Most scholarship on Cuban migration and its social and economic consequences focuses on the large Cuban community in the United States, which is estimated to number approximately 2 million people, including Cuban-born migrants and their descendants, according to the Centre for Demographic Studies (GEMI) at the University of Havana. Of these, some 900,000 live in Miami, Florida, the largest Cuban community outside Cuba. Consequently, Cubans in the US sent a majority of the $1.83 billion worth of remittances entering Cuba in 2023, as estimated by the Inter-American Dialogue, a think tank.

Remittances are the second-largest source of foreign currency income for the Cuban state, meaning they are crucial for the import of goods and products not available on the island. For example, Cuba imports 70%–80% of its food.

A major contribution of Dr Delgado’s dissertation is the introduction of the Cuban diaspora in Madrid as a case to study Cuban migration beyond Miami. Some of the significant differences between Cuban migrants in Miami and Madrid in Dr Delgado’s sample are that the median age is lower in Madrid, with a higher representation of mixed and Black individuals.

While median incomes for Cuban migrants are higher in Miami, although they have a higher cost of living, the employment rate is higher in Madrid. Dr Delgado argues that the latter difference can be attributed to the absence of language barriers and a younger demographic among migrants in Madrid, compared to a larger share of retirees in Miami. Still, individuals in both cities face challenges entering the labour market, with initial jobs often underpaid and lacking job security. There is also a slight overrepresentation of women in both cities, following global trends.

Migrants’ Remittance Behaviour in Miami and Madrid

As it pertains to migrants’ remittance-sending behaviour, migrants in Miami sent $2,615 on average per year, while those in Madrid remitted $1,604 annually. Such a difference reflects the higher median income in Miami, and both amounts fall within the range for a typical migrant worker globally, as estimated by the United Nations in 2019.

The vast majority of migrants were driven to send remittances due to a strong sense of responsibility to support their families, with mothers being the primary recipients of remittances from Miami and Madrid. On average, migrants in both cities have been sending remittances for seven years.

Because of the US trade embargo against Cuba, there is a “slightly higher reliance on informal [remittance-sending] mechanisms in Miami compared to Madrid, partly due to more limited access to formal channels such as bank accounts. Nonetheless, migrants in Miami still use parcel agencies, Western Union, and other OFAC-authorised providers, which are formal mechanisms. Overall, migrants in both Miami and Madrid combine both formal and informal mechanisms to send remittances,” Dr Delgado explained.

“Remittances are not gender neutral”

Her dissertation finds that female recipients are more likely to use remittances to fulfil essential needs, like buying food or medicine for their family. Men, on the other hand, spent remittances on non-essential expenses. Women in both Miami and Madrid also send a higher proportion of their income as remittances compared to men, despite earning lower wages on average. This gender disparity is echoed by the UN’s International Organization for Migration (IOM) and is arguably related to traditional gender roles and women’s perceived position as the family caregiver. Dr Delgado believes such gender dynamics are not sufficiently accounted for: “I would say that a big problem, especially with policies related to remittances, is thinking that all migrants and remittances are the same, but remittances are not gender neutral.”

She adds, “If women in Cuba are receiving remittances and mostly spending remittances on essential consumption, that means they are not doing much for [their own] development, such as education, savings and investments. But men, when they were sent a higher proportion of remittances, were investing in businesses. So it’s important to develop policies where women, for example, could also invest in businesses if trained on how they could use remittances for that.”

Cuba as the Canary in the Coal Mine for Increasing Transfer Costs

Although remittances play a crucial role for both the Cuban people and the state, the country is usually omitted from the wider remittance literature, perhaps due to a lack of official data. The Cuban government does not publish official remittance figures, leaving researchers to estimate.

Regardless, studying Cuba can bring valuable insights. For example, remittance flows to Cuba are, because of the US trade embargo limiting formal banking and trade with the island, more politicised than those to other countries. This, in turn, leads to increased use of informal remittance channels. These include relying on personal networks or unlicensed agents, such as so-called Money Mules, to deliver money in a way which bypasses official institutions. Dr Delgado found that the cost of sending remittances to Cuba is generally between around 8%–11%, shooting up to 40% during the COVID-19 pandemic.

The UN has identified the average cost of sending remittances globally at about 5%, with the intention of lowering it to 3%. However, “there have been some discussions, in the United States, for example, to start taxing remittances. And what I can see happening, just because I know the Cuban case and how the restrictions impact the remittance market there, is that those migrants living in the United States wanting to send remittances to their families are going to go through more informal mechanisms trying to avoid [the higher costs],” Dr Delgado said.

Adrian Ganic is a M.Sc., THE LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE and a DDRN CORRESPONDENT

Understanding Long-term Inequality Trends in Africa

Adrian Ganic — Fri, 30 May 2025 10:06:12 +0000

Africa contains the widest between-country variations in income inequality globally, with the top 10% of the region controlling almost 56% of total income. The roots of many issues underlying this inequality go back to the colonial era. Yet, international development scholars and practitioners are, understandably, often concerned with analysing contemporary challenges in an attempt to solve them. Limited data availability from Africa’s colonial period adds to the difficulty of studying the historical causes of inequality.

Since 2019, the African Long-term Inequality Trends (AFLIT) research network has been collecting data and analysing the colonial origins of current-day inequalities in Africa. AFLIT is centred at the Faculty of Economic History at Lund University but has research partners around the world. The project’s primary methodological approach is the production of social tables to study between-group inequality. A social table is a historical method for estimating income distribution and economic inequality within a society at a specific point in time. It categorises different social groups—elites, middle classes and labourers—based on their estimated population size and average income (see image).

“My background in anthropology and my work with small-scale farmers in Africa have shaped my focus—I really want to include them. They are often left out of historical narratives because they are difficult to track, so it has always been my ambition to make sure they are represented. Some 15 years ago, my former supervisor led a project on exploitation during the colonial era, and that’s where the idea of using social tables came up. I picked up on it, and I’ve been working with it ever since,” Ellen Hillbom, Professor of Economic History at Lund University and coordinator for AFLIT, told DDRN in a recent interview.

AFLIT has produced full social tables for Botswana, Côte d’Ivoire, Ghana, Kenya, Senegal and Uganda, with work ongoing for Angola and the other former Portuguese colonies, Malawi, Mauritius, Nigeria, Tanzania (Tanganyika and Zanzibar), Zambia and Zimbabwe.

Research Findings

AFLIT’s main research findings thus far are that:

income inequality increased in all cases over the study period, roughly between the 1910s to 1960s
levels of inequality are impacted by the presence of Europeans—and to a lesser degree, Asians—in the wage or agricultural sectors
there have been unequal opportunities for African groups to profit from commercial opportunities

Professor Hillbom and collaborators lay out these findings in a 2024 paper analysing income inequality and commercialisation using data from the six countries with completed social tables. All studied economies are predominantly agrarian. Colonial mining economies in Africa, such as the Belgian Congo and Zimbabwe, were not part of the study.

A crucial mechanism for increased inequality in the six cases is that colonial powers introduced monetisation and export-oriented commercialisation of agriculture in their occupied territories. By creating markets for agricultural products, colonialism puts a monetary value on such products—meaning that individuals with significant ownership can increase their wealth. This process, in turn, leads to heightened income inequality.

The presence of mainly European expats heavily impacts how the profits from commercialisation are distributed and, therefore, the level of between-group inequality. Non-Africans, where present, secure a large share of the profits either through farming and business or indirectly through higher salaries. More opportunities were available for African groups to benefit from export sectors when non-Africans were less prevalent. In such cases, the inequality between African classes is higher.

The paper also finds evidence that inequality is higher in colonial economies exporting more capital-intensive agricultural commodities such as livestock because of the higher barrier of entry into the export sector.

Botswana: A Case in Point

“Take Botswana, for example: even before colonial rule, there were significant differences in how many cattle people owned. But because there was no export market to sell them to, that wealth did not translate into monetary income, which means it didn’t show up as income inequality. Colonial capitalism changed that,” Professor Hillbom said.

Colonial Botswana is Professor Hillbom’s primary area of expertise. It was a research collaboration starting in 2012 with Jutta Bolt, currently Professor of Global Economic History at the University of Groningen, to produce social tables for the country that eventually sparked the idea of establishing a research network to study income inequality during the colonial period across Africa.

Botswana is a case that strongly illustrates AFLIT’s findings. Studies show that the nature of chieftainship in Botswana changed under colonialism in the sense that the social contract between ruler and subject was no longer just about patronage but a capitalist class relationship through which chiefly families could build personal wealth, creating new income inequalities. After 1930, the British started to develop Botswana’s cattle export industry. In the absence of significant amounts of white settlers, the large-scale cattle-owning African elite could use its economic advantage to dominate the growing sector.

While large-scale herders grew their wealth by participating in colonial trade, the colonial economy pushed the lower African classes into poverty. Botswana’s original role in the British imperial economy was to act as a labour reserve for the mineral industry in the neighbouring Union of South Africa. Britain and South Africa implemented a series of taxes and other policies suppressing producers. Such taxes pressured local Botswana chiefs to send their subjects to work in the mines to earn a wage used to pay the colonial taxes. With thousands of men migrating to work in South Africa, most societies in Botswana lost their economic self-sufficiency, impoverishing and transforming them into communities defined by the supply of cheap labour. As a result, wealth inequality between the lower classes and the elites had increased by the time Botswana achieved independence—75% of Botswana’s total cattle herd was in the hands of 15% of the population.

Botswana is today an upper-middle-income country. The nation’s population has also seen living standards rise dramatically thanks to the redistribution of profits from its vast diamond reserves. Yet, Botswana remains one of the world’s most unequal countries, with the same elite group of large-scale cattle owners dominating the political landscape until the Botswana Democratic Party’s (BDP) unexpected defeat—the first in its history—in the 2024 elections.

The Significance of Historical Perspectives for Development

Understanding the historical roots of present-day development challenges is crucial for formulating strategies and policies to combat such issues. Professor Hillbom believes that studying international development and economic history go hand-in-hand, although the fields remain significantly divided. She explains: “I think that these two subjects go really well together, but I also understand that development studies are very present-focused for natural reasons, that there are a whole lot of challenges today, and having this historical research maybe isn’t something that is necessarily prioritised at African universities.“

On the other hand, Professor Hillbom notes that most economic-historical investigations are done on Global North cases since the majority of research is being conducted in Global North nations by individuals from those countries. “You could fill libraries with [research on the] British industrialisation, whereas there are comparatively few researchers working on the economic history for Africa, Asia and Latin America. But I think it’s growing. There is a growing interest in the economic history of the world outside Europe and North America,” she said.

This trend is highlighted not least by the winners of the 2024 Nobel Prize winners in economics, Daron Acemoglu, Simon Johnson and James Robinson. They argue that different types of European colonialism have determined which institutions—inclusive or extractive—form in a particular territory. In each instance, over time, minor variations in inherited institutions interact with critical junctures, leading to growing economic divergence. How Europe colonised the United States differs from Botswana, for example. The authors have popularised their thesis in the book Why Nations Fail.

The argument is far from perfect. It has been criticised for being Eurocentric in how it describes development and for ignoring that “inclusive” institutions are also a legacy of extractive colonialism, such as slavery in the US. Nonetheless, Acemoglu, Johnson and Robinson deserve credit for reintroducing the developmental impacts of colonialism through institutions into the mainstream.

AFLIT’s research is based on detailed statistical studies of individual cases, while the works of Acemoglu, Johnson and Robinson aim to produce a general theory of inequality applicable across contexts and continents. Both approaches, however, seek to show how historical developments matter for current-day inequality in Africa and the wider world. Professor Hillbom emphasises that AFLIT’s next phase is “to get our calculations accepted by other major inequality research groups so that they show up in their networks and get cited and used to a greater extent”. The causes of inequality are global in scope. They can only be understood with insights from all regions.

Adrian Ganic is a M.Sc., THE LONDON SCHOOL OF ECONIMCS AND POLITICAL SCIENCE and a DDRN CORRESPONDENT

Why Country Credit Ratings Matter for Development

Adrian Ganic — Sun, 09 Mar 2025 10:42:05 +0000

Sovereign credit ratings are meant to be independent measures of a country’s ability to pay its debts. Such ratings are important because they determine the interest rates a country faces in the global financial market and, therefore, its borrowing costs. Ratings also matter for attracting investments by international companies, so-called foreign direct investment (FDI).

Unfortunately, sovereign credit ratings are negatively biased towards the Global South. UNDP estimates that unequal country ratings have cost African states more than $24 billion in excess interest and over $46 billion in forgone lending. The African Union is currently spearheading a growing reform movement to establish alternative rating agencies to Fitch, Moody’s and Standard & Poor (S&P)—the three American firms completely dominating the sovereign ratings industry. Their power was cemented by law, as they were the only ratings agencies officially recognised by the United States between the mid 1990s and 2003.

DDRN has interviewed Dr. Ramya Vijaya, Professor of Economics and Global Studies at Stockton University, to discuss her recent article on sovereign credit ratings and financial subordination, as well as the wider implications of unequal access to finance for developing countries.

How Credit Ratings Constrain Developing Countries

On whether she thinks country credit ratings are understudied, Dr. Vijaya said: “Sovereign credit ratings come into focus when there are moments of crisis. So in 2008, for example, during the global financial crisis or the 2012 European debt crisis. Then again during COVID a little bit when credit ratings became this sort of doom loop. But once the spotlight of the crisis goes away, it is definitely an understudied field when we talk about making lasting changes.”

It is crucial to investigate the long-term effects of country ratings because they determine how much money governments—particularly Global South countries with lower tax revenues—can afford to spend on healthcare, education and other important areas for development.

For instance, Cameroon and Ethiopia’s credit ratings were slashed after they requested relief from the Debt Service Suspension Initiative (DSSI). The DSSI was created in 2020 to grant low-income countries temporary debt relief, allowing them to expand spending to recover from the pandemic. Instead, the rating downgrade increased the costs of Cameroon and Ethiopia’s debt, prolonging recovery by straining their budgets.

A report by the International Monetary Fund (IMF) shows that Global North countries averaged 12% of GDP on pandemic-related spending. The numbers for emerging market and low-income economies were 6% of GDP and 3% of GDP, respectively. Yet, emerging and developing states accounted for over 95% of sovereign rating downgrades in 2020.

These examples highlight how developed economies get additional leeway from rating agencies to pursue a countercyclical fiscal policy, meaning they can ramp up spending or cut taxes during downturns to stimulate growth. Consequently, these countries can recover more quickly from crises. Global South nations, meanwhile, cannot increase government expenditure due to the threat of rating downgrades. Such procyclical policies tend to exacerbate debt problems and prolong recessions.

Beyond intensifying economic crises in the short term, limited access to finance affects long-term development. “Development does not follow the business cycle. Development is more on a 10–15-year horizon. Right now, [long-term] financing at affordable rates almost does not exist. Health is a very good example. What happened during COVID was that for a very long time, when the main prescription you are getting is austerity, what falls off the radar are things like investment in health infrastructure and education,” Dr. Vijaya explained.

In her paper, she shows statistical evidence that improved country ratings lead to higher spending on health and education as a proportion of government expenditure and vice versa. A higher rating deems a country less risky, allowing them to spend more without the risk of higher borrowing costs and capital flight. Crucially, developing countries are subject to downgrades more often because of the methodology employed by credit rating agencies. As a result, a short-term fiscal horizon based on austerity is imposed on the Global South, worsening inequality in the global financial system.

Flawed Rating Methodology

Fitch, Moody’s and S&P all employ several quantitative and qualitative measures to shape a country’s credit rating. These are roughly: economic resilience and stability, financial health and budgetary outlook, monetary policy direction, governance and institutional strength, and balance of payments and international financial position.

The three agencies publish different methodologies, but there is broad alignment on indicators used and convergence on the ratings given to countries. Firstly, the quantitative indicators, weighted differently, decide a cumulative score; the higher, the better. Then, unknown qualitative measures adjust the score, determining the final rating.

There is grave potential for bias in the qualitative indicators’ lack of transparency. Moreover, the quantitative indicators give Global North countries clear advantages. For instance, as shown by Dr. Vijaya’s paper, the rating methodology prioritises the size of economic activity, meaning a larger GDP or GDP per Capita results in better ratings. Larger economies are mostly located in the Global North.

What currency a nation has highly impacts its sovereign credit rating. A country gets upgraded if it uses what is called a reserve currency—USD, Euro, Canadian Dollar—as legal tender because it is deemed less risky. Reserve currencies also give countries improved credit ratings indirectly by decreasing the proportion of foreign currency debt, as foreign currency reserves are usually held in USD or Euro. Debt issued by developing states in local currency displays greater sensitivity to shifting economic conditions. This currency hierarchy reinforces existing inequalities in the global financial system.

Repayment as the Bottom Line

There is, furthermore, no mechanism for developing countries to catch up. Neither the rating agencies, the International Monetary Fund (IMF) or the World Bank—the two main financial institutions disbursing loans and grants to the Global South—distinguish between different types of government expenditure. Spending on education or spending on weapons. For a country’s ability to access development finance, it counts the same.

This is because the international financial architecture leans towards ensuring repayment. Dr. Vijaya explains: “The metrics that are used are all about how [developing countries] can pay back and how quickly they can pay back. Fiscal discipline is okay, but you need to talk about where that [expenditure] cut should come from. If you’re not interested in that, it seems like you’re just interested in the repayment aspect. You’re not really interested in directing these funds to the right place. That is, I think, crucial.”

Similarly, there are no evaluation criteria to ensure that funds are not squandered by corruption, as seen in the case of Sri Lanka between 2019 and 2022. “Where were the global institutions when they were pushing Sri Lanka to take all these loans? Their valuations never looked at those issues whereas Sri Lankan civil society was constantly asking: ‘Where is the money?,’” Dr. Vijaya said.

China has in recent years emerged as an alternative lending source for developing countries, providing over $1.3 trillion between 2000 and 2021. China does not follow the conventional sovereign credit ratings. There is, for instance, evidence that a disproportionate share of Chinese state loans to Africa are made to governments with high credit risk levels. The long-term impact of China on traditional country ratings remains to be seen.

What Denmark can do to Help

Development in the Global South requires fair access to credit. Presently, the international financial system is trapping South countries in a Catch-22. They can either prioritise their sovereign credit rating and decrease spending on healthcare and education or try to develop such social infrastructure while paying higher borrowing costs. Advanced economies do not have to make this choice.

Denmark can use its platform at the UN and other multilateral forums to advocate for positive change. The Danish Development Cooperation Strategy focuses strongly on mobilising climate financing for the green transition. Developing countries need greater fiscal capacity to raise the money needed to combat climate change. The current short-term, austerity-based fiscal spiral advanced via sovereign credit ratings makes such expansive policy hard, if not impossible.

Dr. Vijaya thinks Denmark should:

Support the African Union’s call for more regional credit rating agencies, breaking the dominance of the big three firms
Offer expertise and partner with Global South actors to establish these regional credit rating agencies
Platform and support G77 proposals for reforms of the unequal sovereign debt system
Invite scholars from the Global South who study international financial inequalities to partner with Danish universities
Support the UN Framework Convention on International Tax Cooperation, which centres on developing countries

Ultimately, improving sovereign credit ratings is part of a wider reform agenda to decrease global inequality. Developed states such as Denmark have a responsibility to play their part.

Adrian Ganic has a M.Sc. from THE LONDON SCHOOL OF ECONIMCS AND POLITICAL SCIENCE a is a DDRN INTERN

Fattige, Udsatte og Udstødte i Nord og Syd 1:2

Arne Wangel — Fri, 10 Jan 2025 19:00:50 +0000

I denne og en følgende artikel gengives de fire oplæg fra DDRNs arrangement under Forskningens Døgn 2024

Fattigdom globalt og i Danmark v/ Knud Vilby

Knud Vilby, som har arbejdet med fattigdom i Danmark og i Afrika, indledte med at nævne, at ”der er flere definitioner på fattigdom. En af de vigtigste definitioner er fattigdom som mangel på muligheder. Den dækker både over fattige individuelle mennesker og for fattige lande. Sidste år skrev Birthe Larsen, CBS, en lille bog ’Hvorfor stiger uligheden og hvad gør vi ved det?’ hvor hun også beskriver den danske situation og i øvrigt situationen i rigtig mange lande i den vestlige verden, at uligheden har været stigende siden slutningen af 1990’erne, også i det velregulerede land som Danmark er. Ulighed og fattigdom er ikke det samme, og nogle argumenterer for, at det ikke gør noget, at der er ulighed i et samfund, bare der er vækst, så det kan løfte alle, både rige og ikke så rige. Birthe Larsen har evidens for, at ulige samfund ikke har bedre vækstvilkår end andre. Hun nævner, hvad ulighed betyder for fattigdom i Danmark. Den er faldet lidt i de seneste år, men vi har omkring 54.000 børn – seneste tal fra 2021- som har levet i fattigdom i mindst et år ud fra EU-definitionerne. Der kan være dyk i indkomst, som kan håndteres. Men man ser på, hvor mange der har levet i fattigdom i tre år i træk, så er det 30.000 børn. Hun siger at vokse op i fattigdom spænder ben for børnene resten af livet. Tal fra Egmontfonden viser, at børn fra fattige familier har dårlige chancer for at klare sig gennem skole- og uddannelseslivet og det faglige senere i livet. Så det har livslange konsekvenser at vokse op i fattigdom. Også i Danmark, hvor nogle vil hævde, at vi stort set ikke har nogen fattigdom.

Bruger vi definitionen om mangel på muligheder, så kan man sige, at det samme gælder i en vis forstand i fattige lande. Der er en række årsager til, at de er fattige. Hvad er deres muligheder for at komme ud af fattigdommen? De er sat bagud fra starten. De har typisk ringere adgang til kapital, til investeringer, de har en ringere infrastruktur, ringere adgang til selvstændig forskning. De er meget afhængige af, hvad investerende firmaer bringer ind af teknologi, fordi de har ikke en selvstændig udvikling af nye metoder. De har generelt et lavere uddannelsesniveau. De er bagud på alle mulige områder. Men de har billig arbejdskraft, og på grund af de andre ting, skal den arbejdskraft være rigtig billig. Og mange lande laver frihandelsområder for at tiltrække investeringer, forbyder fagforeninger og sikrer, at arbejdskraften er så absolut billig som den kan blive. Man kan have en fornemmelse af – og jeg er med til at skrive om det – at der er masser af ressourcer, unge mennesker og masser af muligheder, og der sker en masse spændende ting. Og det skal man altid huske. Men den anden sandhed er den, at de er bagud på points i starten, og at de kommer længere og længere bagud. Jeg prøvede at beskrive det i en lille bog ’Kampen mod de fattige’ for nogle år siden, om de mekanismer, som er med til at fastholde fattigdom og uddybe fattigdom nogle steder, sundhed, miljø, uddannelse, forskning, alt det som man er bagud på. En sportsmetafor: 200 lande løber om kap med tilsyneladende samme forudsætninger, men klarer sig ikke alle lige godt. De 50 første over målstregen får hver udleveret en cykel og så fortsætter kapløbet som et kapløb mellem cyklende og løbende. Ved næste målstreg får de femten første, som mærkeligt nok alle er cyklister, hver udleveret en bil. De fortsætter med 100 km/t mod endnu en målstreg. Man kan godt give de bagerste avancerede løbesko, men det vil ikke ændre noget. De vil hele tiden komme længere og længere bagud i forhold til dem, der har den mest avancerede teknologi. Nogle kan komme med eksempler på, at der er undtagelser, og det er rigtigt. Kina er et af de lande, der har reduceret fattigdom. Kinas umådelige økonomiske vækst, som også har skabt voldsom øget ulighed i Kina, men som også har været med til at udrydde den absolutte fattigdom.

Der er endnu et par faktorer at medtage, når man snakker lande og fattigdom. Fattige kan også have en tendens til at ødelægge miljøet. Vi har det store ansvar for klimakrise. Men fattige mennesker uden ressourcer, bønder, nomader bruger hvad de kan bruge, de udpiner jorden, de fælder træer. De gør ting, som de via nedarvet visdom godt ved er forkert, men som de er nødt til at gøre for at overleve. Dermed accelerer de nogle steder den miljø- og klimakrise, som i virkeligheden rammer dem selv allerhårdest og gør dem endnu fattigere. I 1990 kom der fra Verdensbanken den første store fattigdomsanalyse om hvem der lever for under 1 $ om dagen. Dengang 1,1 mia. Forventningen var, at det kunne nedbringes til ca. 800 mio. ved årtusindskiftet, men da var tallet det samme, dog en mindre procentdel af jordens samlede befolkning grundet dens vækst. I dag siger de seneste tal 700 mio. har 2-3 $ om dagen (absolut fattige). Nu er vi der, hvor man havde forventet at være for 25 år siden. Antallet af fattige voksede under Corona epidemien. Aktuelt vokser det igen formentlig med de mange konflikter. Og klimakrisen føles i rigtig store dele af verden med tørke og oversvømmelse, som tvinger folk væk fra de områder, hvor de har boet hidtil, og hvortil de ofte ikke kan komme tilbage. Hvorfor er det så svært i en verden med overforbrug og overproduktion samt en klimakrise skabt af, at der bruges for meget? Vi lever i en markedsøkonomi, som har den funktion, at den koncentrerer velstanden, medmindre man med meget stærke politiske indsatser modvirker den tendens. Globalisering med fri bevægelighed for næsten alting undtagen arbejdskraft, jf. stram udlændingepolitik. Der kan spekuleres verden over. Andelen af investeringer til lønninger falder i forhold til andelen der går til rentebetalinger. Formuerne koncentreres mere og mere.

OXFAM laver nogle analyser: milliardærer har vækst i formue på 35%. 5 mia. har ingen vækst haft. De rigeste 48.000 mennesker i DK nu har en formue, der svarer til hvad 3,9 mio. af befolkningen ejer. Ejendoms- og jordfordelingen ligner hvad man havde for flere hundrede år siden. Den voksende ulighed i DK bliver påvist i statistikker en gang om året. Der er ikke nogen fattigdomsgrænse, og børnefattigdom snakkes der ikke om. Når uligheden vokser i DK: En reguleringsmekanisme for overførselsindkomster som er lavere end den for lønninger. Det forklarer stadig stigning i ulighed. Dogmer i DK: 1. Øge arbejdsudbud, 2. Betale sig at arbejde også lavtlønnet vs. understøttelse (reducere de laveste overførsler, f.eks. enlige mødre), 3. Stram udlændingepolitik, f.eks. kontanthjælpsloft næsten kun rammer dem; politikere snakker udenom, det ønsker man ikke at gøre noget ved. 3. generel erhvervs- og beskæftigelsespolitik – gerne tiltrække investeringer udefra, gerne sikre generationsskifte i virksomheder, hvilket har ført til sænkning af formue- og virksomhedsskatter, konkurrence mellem vestlige lande – langt lavere skat på formuer. Samme frygt for fravalg af investeringslande ses også i den fattige verden. Store virksomheder afholder auktion: Hvem kan give os de bedste vilkår? Afgørende at tiltrække udenlandske investeringer. I fattige samfund får de fattige ingen støtte overhovedet.”

Fredens Havn/Pirathavnen v/ Henrik Valeur

Arkitekt Henrik Valeur, som er forfatter bl.a. til bøgerne ’The Floating Community’ og ‘An-other City’, fortalte om sin aktionsforskning i et flydende bofællesskab for outsidere Fredens Havn/Pirathavnen i Københavns Havn i 2018 og frem til begyndelsen af 2022:

”I aktionsforskning er det vigtigt ikke så meget, hvad man forsker i, men hvem man forsker for. Forskningen er baseret på et direkte samarbejde med bestemte befolkningsgrupper med henblik på at forbedre og skabe nye muligheder. Mit oplæg handler om vores manglende forståelse og derfor måske også frygt for det fremmede og anderledes både i forhold til andre mennesker – her havne nomaderne, og i forhold til naturen, som nomaderne accepterer som den er – den ydre som den indre – og forsøger at tilpasse sig i stedet for som bofaste at ville kontrollere den.

Det blev nævnt, at nomader også forurener. Det gør de måske også. Men som udgangspunkt er de dem, der forurener mindst overhovedet. De udpiner ikke jorden, de flytter sig. Deres arkitektur er derfor også let og flytbar og sætter få eller ingen spor. Der er forskel på at skabe arkitektur og at være arkitekt. Arkitektur er noget alle har haft til alle tider, hvorimod arkitekten er den bofastes opfindelse, som skal give form til denne arkitektur, som er tung og fast og afsætter masser af spor, også massive økonomiske fodspor. Frygten for at miste deres frihed er indskrevet i havne nomadernes sange og fortællinger om hvordan de tidligere er blevet handlet og fanget og som tvangsarbejdere og holdt som slaver. De få hav nomader, som er tilbage, er truet af 1) de nationalstater, hvis territorier de bevæger sig imellem. 2) en såkaldt civilisatorisk udvikling, som udsletter deres kultur. 3) de fastboendes og turisternes overforbrug af naturens ressourcer og forurening. Det kunne f.eks. være koralfjeld, der bliver ødelagt, og 4) de naturfredningsprojekter, som er en konsekvens heraf samt de klimaforandringer, som ødelægger de økosystemer de er afhængige af.

Hav nomaderne er marginaliseret. Deres syn på verden er totalt uforståeligt for den dominerende kultur, hjælpeorganisationer og embedsmænd. I København boede der også en slags hav nomader. Outsidere, som ikke passede ind i det moderne samfunds fastlagte orden. Det selvorganiserede flydende bofællesskab i selv-istandsatte småbåde, selvbyggede småhytter.

(Speak til video) Hesten, som her spiser morgenmad med Amalie, kaldte det Fredens Havn, andre Pirathavnen, Et kort billede af den perfekte by. Alternativet til det her. Ham her mistede først sin kone, sin datter og sin svigersøn. Han fandt fred i havnen og fik mod på livet i sine små overdækkede joller, hvor han byggede mærkelige apparater og eget badeværelse. Hesten byggede dette kombinerede drivhus og værksted og dagligstue med byens bedste udsigt. På plankerne udenfor herskede hejren. Faktisk trives fuglene rigtig godt. I den lokale biotop skabte de flydende boliger ly i sivene langs vandet, hvor de kunne yngle i fred. Så blev sivene ryddet for affald efter beboerne ikke længere bor der. De badede selv i vandet og havde derfor en egeninteresse i at holde det rent. Jeg siger det fordi det var ligesom et hovedargument imod, nogen satte et rygte i gang om at de sked i vandet. Men de byggede faktisk multtoiletter, de var ikke tilkoblet hverken kloaksystem eller lign. Det gjorde også, at de ikke brugte så meget, fordi man tænker over hvor meget vand man bruger og hvordan man kan genbruge det, hvis man skal hente det i en dunk en halv kilometer væk.

På land havde NOMA stillet et lille landområde til rådighed for dem. Her komposterede de afføringen og brugte den som gødning i deres fælles køkkenhave. På land kunne man finde mange selvgroede spiselige planter. Det var nogenlunde de samme ingredienser, der blev brugt i deres folkekøkken og i verdens bedste restaurant. I modsætning til køkkenpersonalet i NOMA, måtte beboerne i havnen selv finde på løsninger til at opbevare og tilberede maden. Her lavede vi forsøg med nedkøling ved hjælp af salt i to lerkrukker og opvarmning ved hjælp af sølvpapir fra chips poser. Man bruger asken fra bålet til at lave aske pulver. Gabriel havde en nemmere måde at vaske tøj på, at hænge det ud i regn og blæst et par dage. Speederen har bygget en lerovn og en fantastisk træskulptur, som han har kaldt havguden. Sira tegnede og digtede. Stormen og Karmi optrådte. Loftet i Patricks båd var et kollektivt kunstværk malet af beboerne i havnen. Havnen var i sig selv en slags kollektivt arkitekturværk, der hele tiden forandrede sig.

Beboerne var kreative og spirituelle mennesker, måske var det derfor de ikke passede ind i det omgivende samfund. Noget som forbandt de meget forskellige mennesker i havnen, og som gjorde det svært for dem at passe ind i det moderne samfund, og som de havde til fælles med havnomaderne, var et stærkt behov for frihed. Som Patrick udtrykte det, når man bor på sin egen båd, er man kaptajn i sit eget liv, eller som Pastor sagde: Det der er ude, er for mig hjem. Det samme gjaldt for Andreas, som havde det princip, at alle hans ejendele skulle kunne være i en rygsæk. Eller måske var man bare som Kami et uidentificeret flydende objekt. Siri tegnede et kort over, hvordan hun flyttede rundt i havnen. Først boede hun i et telt i haven. Så lånte hun en båd. Derefter fik hun en kæreste, som hun flyttede ind hos. Så flyttede hun over til Flyver, og senere er hun flyttet tilbage til Hesteøen. Det er nemt at flytte rundt, når ens bolig er flydende. Det er bare at flytte den, hvis man bliver træt af naboen. Og derfor kunne mange forskellige mennesker have adresse det samme sted. Folk som måske ellers ville have levet på gaden, men også unge aktivister, som forsøgte at leve helt uden penge. Er det ikke det mest subversive, man kan gøre i vores samfund? Der var studerende fra de kreative uddannelsesinstitutioner på Holmen bagved, og der var selvlærte kunstnere og åndemanere.

Det mindede lidt om kolonihaver, hvor der typisk bor folk, som ikke passer ind i socialt boligbyggeri, eller hvad der ellers er mulighed for. De selvgroede kolonihaver som her i Sydhavn blev til at begynde med anset for slum, men blev med tiden meget mere eftertragtede. Det der i begyndelsen var isolerede lejligheder i isolerede murstensbygninger med centralvarme med træk og slip. Grunden til at kolonihaverne blev mere eftertragtede, tror jeg, er fordi beboerne selv skabte, forandrede og udviklede deres miljø. Det kan de andre ikke. Der er alt bestemt på forhånd af nogle andre, f.eks. arkitekter. Spørgsmålet er ikke om det skal være det ene eller det andet, men om der overhovedet skal være plads til det andet, til det der ser lidt anderledes ud, til dem der lever lidt anderledes, dem der ikke har råd, eller som ikke har lyst til at bo og leve på samme måde som flertallet.

I Danmark har vi en lang maritim tradition, som rækker tilbage i hvert fald til bronzealderen, hvor man sejlede ned gennem de europæiske floder til Sortehavet og Middelhavet. Kortet her viser de områder, der vil blive oversvømmet ved seks meters havvandsstigninger. I stedet for at blive ved med at opføre tunge og faste betonbyggerier helt ned til kajkanten, kunne man jo flyde på vandet. Man kunne måske endda forestille sig et netværk af flydende bebyggelser, som ville skabe nye forbindelser på tværs af landet. Det efterprøvede vi på en rejse rundt til forskellige havnebyer i Danmark, hvor vi byggede elementer til et muligt nyt flydende bofællesskab sammen med frivillige. Vi var på byggefestival i Ebeltoft, hvor vi prøver at skabe en landsby af tiny houses på land. Med på turen var Mikkel, som var i erhvervsafklaringspraktik i Randers. Desværre fulgte bostøtten og de andre hjælpemidler, han havde, ikke med, fordi det jo kun foregik i én kommune. Det er måske problemet for myndighederne, hvordan de med deres bofaste tænkning, hvordan skal de forstå og hjælpe en rastløs person som Mikkel. Vi kom også til Ålborg, hvor vi fik vores små bygninger udstillet af lokale gadekunstnere og udstillet på havnefronten i byen.

Bagefter flyttede vi så ud til Fjordby, hvor folk oprindeligt var flyttet ind i fiskerskure, men der var de lidt udsatte for vestenvinden. Om efteråret flyttede vi så ind på det nedlagte værft, og her boede jeg hele vinteren i et hus på 12 m2. Men Byrådet gav tilladelse til at byudvikle værftsområdet og så blev vi smidt ud. Så skar vi en meter af huset og satte det på agterstavnen af Lars’ skib, og så sejlede de ud i verden med det, fordi de var nemlig også blevet smidt ud. Sammen med det Grønlandske Hus, Veteranforeningen, og Udsatterådet i Aalborg lavede vi et spil om det flydende bofællesskab, som jeg spillede med kommunalpolitikerne og medlemmer af Udsatterådet. Men den slags byudvikling bliver der vist ikke plads til, så vidt jeg kan fornemme.

Meningen var ellers, at med det skulle myndigheder og politikere have mulighed for bedre at forstå de udsatte og deres anderledes, særlige ønsker.

Der er andre steder, hvor folk bor på vandet. Her er det bydelen Makoko uden for Lagos, den største by i Afrika. Ingen ved hvor mange der bor, men det er efter sigende den største flydende, uformelle bebyggelse i verden. Trafikken i Lagos kan være noget kaotisk, så man anlagde en motorvej hen over lagunen til lufthavnen. Og det er jo lidt pinligt, når der kommer vigtige gæster til byen, at de skal se det slum. Så for nogle år siden forsøgte regeringen at rydde hele bydelen. Det lykkedes ikke, men det lykkedes dog at gøre 30.000 mennesker hjemløse. Ideen om, at regeringen simpelthen kan skubbe folk ud af deres hjem uden nogen diskussion, uden at anerkende årtiers beboelse, synes desværre at være normalt i Lagos.

Myndighederne synes her at gå til byplanlægning ud fra en autoritær synsvinkel som om deres ønsker om udvikling går forud for alt andet. Der er forskel på antallet, men ellers synes historien at være helt den samme om det er et fattigt afrikansk land eller ikke. For hvad skete der med beboerne i Erdkehlgraven, som Frank Jensen højtideligt havde lovet, at kommunen ville tage sig af. Jo, vi beboere i Københavns kommune gav dem 10 mio. til at gøre dem hjemløse, så nogle rige naboer kunne få en pæn udsigt, og 40.000 til at kommunens medarbejdere kunne tage ud og oplyse beboerne om deres rettigheder og muligheder som hjemløse. Det er ikke klart for mig, hvorfor det skulle koste så meget. Det var hurtigt overstået. De kunne blive skrevet op til en herbergs plads, og det var der ikke nogen, som var interesseret i. Fristedet blev ryddet i begyndelsen af januar 2022 efter mere end 10 års eksistens midt i den værste pandemi og det værste tidspunkt på året at blive gjort hjemløs.

Året efter var København så udnævnt til verdens arkitekturhovedstad med et slogan om, at vi har historien til fælles, vi har hverdagen til fælles, vi har naturen til fælles, og vi har arkitekturen til fælles. Men hvem er vi? Samtidig blev der afholdt en stor international kongres for arkitekter i byen og i den anledning havde Kbh. Kommune sammen med By og Havn og Arkitektforeningen inviteret arkitekter til at byde ind og opføre pavilloner langs havneløbet i Kbh.s havn, der skulle stå som danske arkitektursignaturer for verdenspressens tema ’Sustainable Futures Leave No One Behind’. Det var nu ikke til dem, man havde gjort hjemløse. ’Storken’ boede først bag i en varevogn og derefter på en sofa hos en venlig sjæl, så han efter et halvt år fik tildelt en såkaldt skæv bolig. Det at den er skæv betyder bare, at den er bygget af dårlige materialer, eller at det er sjusket håndværk, at den er meget lille og er placeret i den yderste udkant af kommunen langt fra byliv, indkøbsmuligheder. I halvdelen af det fælles affaldsskur har Storken sammen med viceværten indrettet et værksted, hvor beboerne kan reparere cykler og lignende. Han har også bygget et terrasse overdækning med materialer fra Socialforvaltningen til ham og hans nabo. Men nu vil boligselskabet have det hele fjernet og ført tilbage til den oprindelige stand. Også hans campingvogn og varevogn, som han tidligere har boet i, holder på det fælles parkeringsområde uden nummerplader. Så hvad er meningen med skæve boliger, hvis det ikke er at give plads til det skæve liv. Er det at disciplinere de skæve eksistenser, så de kan blive lige så retvinklede som os andre.

Det der gør det endnu mere uforståeligt er, at tilkørslen til de her boliger – de tre bygninger der ligger der, hvor der er tolv lejligheder ialt – er lavet sådan, at man intet kan se udefra. Tilkørslen er lavet parallelt og så med bevoksning hele vejen udenom, så man kan intet se udefra. Det er totalt isoleret, så det er uforståeligt hvorfor det skal være så rigidt som andre steder. Selv på motorvejen kan man intet se. Til gengæld kan beboerne dag og nat høre den konstante summen af bilerne”.

Min pointe er, at dette – at flyde på vandet – faktisk er en mulig løsning på stigende havvandstand, som på længere sigt kan have katastrofale virkninger for byen.”

‘Why not give all the money to the poor?’

Arne Wangel — Wed, 23 Oct 2024 13:48:04 +0000

From Consultancy to PhD research at Roskilde University – interview with Jacob Ulrich

Tell me a bit about your career

I started out studying International Development Studies here at Roskilde University. However, I went to the US to complete my master’s degree in international affairs at Colombia University. It was in 1995. Then, I worked in the COWI consultancy company right after that.

What kind of function did you have?

Several different functions, mostly related to different kinds of international aid. I worked in 30 different countries and was posted in 6-7 countries.

How many years did you work with COWI?

I left in 2015, so almost 20 years with COWI, spending 6-7 years in Eastern Europe, mostly in the Baltics, on EU integration projects. The idea was to have the Baltics joining the EU. Then, I have worked about 15 years in Africa, primarily as head of subsidiaries of COWI and later for an American organisation. Thus, I have been involved in a large number of aid programs and projects, also for the private sector, in Africa and Eastern Europe and to a small degree also in Asia and Latin America. In addition, I worked for one year with the Danish Ministry of Foreign Affairs in Kosovo. I was posted in the Prime Minister’s Office and was a Senior Advisor on Aid Management. The idea was that Kosovo received significant development funding after the war, and needed to manage these funds and projects effectively. So, I have been involved in general management of aid and aid policies. And I have spent time on ‘nuts and bolts’, i.e. implementation.

How was the transition from the role of being a practitioner to become an academic?

After the years in COWI, I worked five years for an American NGO in Africa. And throughout the 25 years in total, I have been keen to clarify and test myself and my alternative ideas. I think many people in the aid business have ideas on how to do it differently and so do I. I have observed that a lot of aid interventions succeed, but still, some do not. The effectiveness is often low. I felt I had ideas about doing things differently. One idea was about social cash transfers. Rather than having funds transferred through the aid industry – spending the money on projects, seminars, conferences, consultants and four-wheel drives – perhaps give the money directly to poor people? Now we have modern technology which can facilitate that, mobile phones, mobile banking and mobile networks and it is possible to reach almost every African in the countryside and do the cash transfer. We have a lot of evidence from socio-economic studies that it works quite well. I wanted to explore that further. And during my personal journey, I knew Lars Buur whom I met when I was posted in Mozambique for COWI 15 years ago. Back then in Maputo we met for lunch once a month, and in 2020 I contacted him about my ideas on social cash transfers. With Lars as Principal Investigator, we made an application to the Ministry of Foreign Affairs about the relatively large research project Cash-In, and it was approved, including a PhD scholarship for me.

How did you manage, after so many years as a practitioner, to enter into the fields of scientific theorizing and methodologies?

In principle, it is not more difficult for me as compared with somebody having recently graduated with a master’s degree, except that the 25 years of practice in 30 countries may have made me academically rusty. However, although working for a consultancy and in a university is different, is in some respects the same as both focus on analysis. Another positive dimension is that I have accumulated lots of what the academics would call “anecdotical evidence”. I have seen how development aid plays out for better or for worse including seeing it from inside the receiving government. I have been an advisor in Ministry of Finance in Zambia, Prime Minister’s Office in Kosovo and the Ministry of Environment in Latvia.

How about getting on par with the academic literature?

That is the challenging part, although I had of course read some of it. But it is a new world, also in relation to how to argue a position. When you write a consultancy report, you essentially make your analysis based on available data, draw conclusions, and share the report and findings with the client. In an academic context, you basically do the same except that you cannot write three lines without making an academic reference rooted in the relevant academic literature. Which is meaningful but also cumbersome because you need to know that relevant literature. So, I forced myself to read a lot and actually learned to enjoy it. However, it is a challenge, also to start at the lower end of the hierarchy, now doing a PhD. Earlier, I was a director. Now it is a different role, I cannot delegate anything to a personal assistant or a team of consultants. To navigate as a director in small companies in Africa has brought me a lot of meaningful experiences and colleagues. It counts a lot, but not as an academic reference. It has made me more knowledgeable about which directions are meaningful to study. But you still have to start from the beginning and read all that literature.

The outlook within this academic sphere is always uncertain, as permanent positions are much fewer compared to the number of PhD projects.

We have fortunately won another project, which includes a postdoctoral position for me. However, engaging into the unknown, you never know what comes next. It is more fun but also uncertain.

What was the original idea of the PhD and Cash-In research project?

Lars and I discussed that it would be interesting to study whether it would make sense to give more development aid in this way – via direct social cash transfers which in real terms are child benefits, pensions, and disability benefits. How to study that? What kind of research was missing in this field? We applied for a research project via Danida’s Research Grant Facility with some partners at universities in Tanzania (Dodoma University) and Uganda (Makerere University). We designed a project which in the title and in the content focused on privately managed social cash transfers, i.e. not via government, but transfers managed by NGOs as an alternative to publicly funded via the government or donor-funded transfers. Previously, not much research was done on the impact on the NGOs and their political role. Thus, there was a gap in academic literature. We had discussions with our partners and made a joint application. We were successful and the project became a five-year program. The primary focus of the program is: What happens when NGOs are managing cash transfers and how does it impact upon politics? My particular focus is about up-scaling and actually focused on both NGOs and government. What if 50 or 75 % of the development aid were channeled to social cash transfers, thus bypassing ‘the aid industry’ and reaching the population directly? In principle, aid effectiveness will increase due to the reduced costs on bureaucracy. Social cash transfers are quite cheap, and if successful in reaching the beneficiaries also local economic activity will increase. Thus, there is a lot of potentially positive aspects, and this is what I cover in my PhD project about upscaling.

The privately managed transfer refers to NGOs and similar organisations. How does this match with the earlier aid policy of providing budget support for governments? Listening to Christian Friis Bach, the argument for direct welfare benefits is also about making the governments responsible for delivering these benefits. Your approach represents one alternative.

Yes and not necessarily a better alternative, but an approach with certain advantages and disadvantages. We can distinguish between different positions about donor aid for social cash transfers. One logic would be that we must assist e.g. Uganda and Tanzania in building some form of welfare systems with all the different kinds of benefits. Then, the question is who should play the main part in such effort? Usually, that would be the government, also due to the social contract between citizens and government. What is then the role of development aid? It can provide some initial funding to kick off the effort, including pilot projects and capacity building. Then, in the medium term, local governments are supposed to take over the funding based upon tax revenues. That is one model. Another position is that cash transfers may be more impactful if channeled through NGOs, which may in some cases be more effective than governments. But how would governments perceive and react to this? We have compared Tanzania and Uganda. In Tanzania, the government has a more universalist approach to social service delivery which NGOs become very much integrated with. Thus, the NGO efforts is fitted into the overall picture. In Uganda, which has somewhat less universal delivery of services and more patronage, the NGOs are not directly integrated but are, or were, running in parallel to government. However, one US based organization for cash transfers was stopped, as the government perceived them as politically negative by supporting the opposition. Studying this, one may assess whether cash transfers via NGOs are effective in terms of socio-economic impact, and how do they impact upon the social contract between citizens and the government. In Tanzania, although the transfers are delivered by NGOs, the citizens may associate them with the government, because it is the government which requests or permits the transfers. Thus, the government receives the political bonus points.

Also as in our Danish context, the discussion is about the level of the various benefits and about who are entitled to receive them. That is a political process.

Yes, to a large extent, in many countries, it is of course a political process. In other places, it is the involved NGOs setting certain limits in some sort of a negotiation with the government.

Could that motivate a critique that when such decision-making is run by the NGOs – and we do not know for how long they can stay – it might end up in some kind of emergency aid, because the effort is not embedded in the particular country?

Yes, that is a question of organizational and financial sustainability. NGOs might have a five- or eight-years program, so what remains when they disappear? The total annual ODA is about 180 billion USD. Within that total humanitarian aid makes up close to 50 billion and 20 % of that humanitarian aid is already now delivered via social cash transfers. Because it is smart as compared to setting up e.g. food facilities, to give cash so that people themselves can go to the market and buy what they need. This is for relief right now, and as long as donor money is available. If you want a permanent system for child benefits in Tanzania and Uganda, you may ask whether it is a good idea to leave it with an NGO during 5-10 years and then just see what happens. With regard to sustainability, imagine that the NGO would manage to bring benefits to for example 10.000 children for 5-10 years. Where is the sustainability? Probably there will be less stunting and malnutrition and likely improvements in education and health parameters. Some human capital will have been developed with these children, which is good. But long-term organizational sustainability of the program would be a concern. Especially if you go big. We modelled some relatively wild scenarios for Uganda. If you changed most of the aid, e.g. 75%, to be given as a child benefit at 18 USD monthly, to all children below the age of 5, then about 2/3 of current national poverty would disappear. It is quite surprising how much can be achieved. After the modelling I went on a field trip in Uganda to discuss with those involved and understand the politics and policy issues. Should and could this scaling of aid-funded social cash transfers be done or not? When you dig into the politics of it, the most sensible observations came from one Director working in the Ministry responsible for social affairs. He agreed that it sounded very attractive, and he himself had been fighting for such an approach. However, he also said that if you launch such a child support system and use development aid for it, and it works with all parameters going in the right direction, what then happens if the donors and the government disagree on something? Examples could be the rights of homosexuals or regional security politics. From the point of view of the government, a very sensitive situation develops. A positive social contract with the citizens would have been established, however donors can turn it off and on with their control of the funding. Thus, it requires a different modality of a financing mechanism, which includes a long-term commitment, e.g. via some sort of long-term global funds.

Does the proposition by Christian Friis Bach have any influence on the Danish government and DANIDA?

Currently, there seems be surprisingly little engagement from Denmark in this field considering how many experiences we have with building such systems in our own country. I don’t think DANIDA is a front-runner in this area.

How about other donors and agencies?

Actually, they appear somewhat more active. Due to the 20% of humanitarian relief already spent on cash transfers, UNHCR, UNICEF and other organisations are used to this line of intervention and may be interested in pushing for this further. ILO and World Food Program are also involved in social cash transfers. At the bilateral level, FCDA, the British, as well as Irish Aid and the Swedes are engaged. The World Bank has gone social over time. Thus, they have different programs for financing welfare reforms and social policy. Often, it is about social safety nets, based on the idea that we need to get the economy going, some will fall between the cracks and they need to be caught by a social safety net. There are different bilateral and multilateral donors, who appear to put this higher on the agenda as compared to DANIDA.

Looking at the political parties in the Danish Parliament, are there any political spokesperson apart from Christian Friis Bach, who may be interested?

One member of the Christian Democrats participated in the seminar and seemed to be very interested. I have not heard any of the others expressing anything. A bit interesting in relation to what Christian Friis Bach mentioned during the seminar, was his reference to his earlier post as Minister of Development Aid. As I understood him, he was back then concerned about direct budget support, but never thought about direct welfare transfers. This issue was not on the agenda at the time. The idea to support welfare programs in that particular way was considered as something for the future. First, we need to make the economy grow, and then when a bit wealthier, welfare can follow. My idea about potentially allocating a major part of the current development aid to social cash transfers to effectively address poverty right now is not on people’s mind. That is not the way of thinking.

There was a response from PLAN Child Foundation, when Christian Friis Bach criticized what he called ‘projectitis’, saying the interventions by the civil society organisations in Denmark are important. However, that involves a lot of overhead and other costs implementing projects, the impact of which may be achieved much cheaper by cash transfers.

My thinking on this is as follows: If new mobile technology and the evidence from cash transfers have made the old aid industry obsolete, when will we know? If you look at other industries, e.g. the transition from horse-driven carts to cars, this was brought about by the consumers choosing differently. The consumers of development aid are the 700 mio. extremely poor people. However, they are unable to vote with their wallet, because they have no money. Thus, any change will probably not come from the poor making different priorities. And it is perhaps unrealistic that the aid industry would suggest such a change itself. Almost everybody I know in this industry are clever, intelligent and conscientious. But maybe there are some structural conditions which makes it smarter to do something differently. And if that is the case, one cannot necessarily count on the aid industry promoting such a change.

Under all circumstances, you have to move carefully. It may be that I and other researchers are pointing towards social cash transfers, but a lesson learned in development aid is that the blueprints sometimes prove to be invalid when meeting reality. What could be done would be to implement pilot scaling schemes in some districts and countries and then observe how it works in terms of socio-economic impact and also in terms of politics – does it lead to better governance? In terms of the latter, the idea is that if you move development aid funds from current areas of expenditure to social cash transfers, then the government becomes somewhat underfinanced, and taxes would need to increase a bit faster to fund government expenditures. Thus, the more cash transfers, the more tax collection to finance the government is needed. That is very healthy, because accountability towards the citizens increases, while accountability towards donors is reduced. But let’s do it by expanding gradually, and then we carefully measure and register how it works. That is my recommendation: Pragmatic and gradually with good documentation in order not to regard this as just another blueprint plan claiming that we have the solution for everything.

What are you currently researching in the Cash Transfer project. You mentioned that you have just now received a new research grant?

Yes, however, that goes in a somewhat different direction. It studies green transition in South Africa and Greenland but also has an angle about cash transfers.

Your own PhD project, what is the specific research question? How far are you in the process?

I defended my PhD last week. I am asking one big question: Would it be a good idea to upscale donor funded social cash transfers? I have Uganda as a case and study various scenarios about socioeconomic effects and what will it take politically to make it happen. It is clear that if it is going to be implemented, it will be due to its political impact rather than the socio-economic results. Thus, I am looking at the political context and the implementation modality. Is it to be managed by the government or by NGOs? Or would it feasible at national level to establish an aid-to-cash foundation i.e. basket funding whereby the donors contribute to a fund which is governed by representatives of donors, civil society and the government. I explore whether such a hybrid model would work as a partly practical solution to some of the political challenges. The short conclusion is that it would be a very good idea in Uganda in socio-economic terms. Politically, it would be quite challenging. For the government as well as the donors, it would be difficult to go in this direction. You must, of course, take the politics seriously and adapt accordingly. Also, implementation modalities represent an area less understood. I study Uganda as a case, as it is until now more resistant when it comes to social cash transfers. Neighboring countries have moved further. Thus, if it will work in Uganda, it might also work in those neighboring countries.

You mentioned that there might be a post doc option after the Phd project. What will that be about?

That is a project with two university partners, Stellenbosch University in South Africa, and Greenland University in Greenland, which is about green transition, people’s perception of values, and whether better deals can be negotiated with the large investors in solar and wind power, and critical minerals, the local communities, and also the government on the side. I will study South Africa, where I have worked earlier. That project may also have a cash transfer dimension, because South Africa has been quite innovative in setting up a lot of large-scale wind and solar energy parks during the last ten years. The authorities forced the private operators to make the local communities co-owners via community trust funds, which owns some of the shares in the energy parks. When a local community becomes a co-owner i.e. a shareholder, then what to do with profits? It could be paid out as dividends which would be similar to social cash transfers. That will be interesting to study if that happens. Currently, however, it appears that the available funding is used for projects rather than for social cash transfers, thus potentially bringing back projectitis.

Also read: Former Danish Minister for Development Cooperation: Globalize Government Ministries!

Also read:

New research 2020 – CASH-IN: privately managed cash transfers in Africa

Taxation Transactions are not a One-Way Street!

Joel Agbesinyale — Thu, 11 Jan 2024 14:09:52 +0000

According to the African Department of the IMF, the main emphasis on domestic revenue mobilisation (DRM) stands as a key priority in meeting Africa’s extensive developmental needs. Considering the recent COVID-19 pandemic, both global north and south researchers have advocated for a heightened and sustainable DRM objective in Africa to sustain development efforts, aligning with the attainment of the Sustainable Development Goals (SDGs). This underscores the significance of DRM, signifying tax revenue collection, in Africa. Consequently, the OECD, through its Africa Initiative, has advocated for Tax Transparency Standards as a means to elevate DRM across the continent. However, a notable aspect is that Africa’s tax bases are considerably restricted owing to the prevalence of high levels of ‘informality,’ worsening tax evasion and illicit financial flows (IFF). In this context, the concept of informality sparks controversy due to its limited conceptualisation as solely pertaining to the informal sector within African economies, impeding revenue mobilisation. Challenging the assumption that only informal sectors hinder effective revenue mobilisation, some researchers argue that the framing of informality concerning DRM poses an inherent problem.

Abel Gwaindepi, a senior researcher at the Danish Institute for International Studies (DIIS) and an external lecturer at the Centre of African Studies (CAS) at the University of Copenhagen, contributes to the discourse by challenging the framing of informality concerning taxation in Africa. In his working paper for the United Nations University World Institute for Development Economics Research (UNU-WIDER), titled ‘‘Domestic revenue mobilization and informality,’’ Gwaindepi critically examines dominant conceptualisations of informality in the context of the recent COVID-19 pandemic. He aims to illustrate how the notion of ‘‘informality,’’ impacting DRM, extends beyond the visible informal sectors within African economies. He also demonstrates that informality is only one among many issues standing in the way of DRM in Africa. Gwaindepi further argues for a re-articulation of informality when it is included in DRM research. During an in-depth interview with Gwaindepi, we discussed his working paper in detail, including other aspects of taxation and revenue in Africa.

Why is taxation important for government revenue?

‘‘Government revenue has always been about taxation. Aid inflows, natural resource revenues etc. will fizzle out but taxing individuals and firms as they produce, trade, and consume goods and services is the backbone of any good tax system’’, Gwaindepi asserted. Considering his focus on the colonial and post-colonial African state and its functions, he explained that what states collect via taxation is the most reliable way for governments to raise revenue. He elaborated on his viewpoint, emphasising that some African countries, perceiving an ‘abundance’ of non-tax revenue, tend to allocate less effort to taxation. Consequently, he argued that anything pertaining to revenue fundamentally centres on taxation. Take Ethiopia, for instance, with a national air carrier like Ethiopian Airways; it serves as a revenue generator without directly taxing its citizens. Similarly, consider a resource-rich nation like Nigeria, where a substantial portion of revenue is derived from oil. In such cases, the state might not need to exert significant efforts towards taxation because of the availability of non-tax sources of revenue. Thus, within this framework, the discussion of government revenue primarily revolves around taxation, according to his argument.

The World Bank notes that Low-Income Countries (LICs), notably in Africa, which are most in need of revenue, often encounter formidable challenges in tax collection. The World Bank reiterates that taxes play a key role in sustaining growth and equity, especially within the context of the COVID-19 pandemic. Consequently, the World Bank advises that nations collecting less than 15% of GDP in taxes must significantly strengthen their revenue mobilisation to address the fundamental needs of their populace. Therefore, the question arises: How can countries effectively enhance their domestic revenue mobilisation?

Effective ways of mobilising tax revenue

‘‘Do countries have the capacity to mobilise revenue? Capacity is one side of the coin. You also have what we call the tax base, that speaks to the economy where the money is. As people and firms produce, sell, and consume goods and services, governments have an opportunity to collect tax revenue’’, Gwaindepi responded. A tax base encompasses the entirety of income, property, assets, consumption, transactions, and other economic activities subject to taxation by a governing authority or government. ‘‘You can be an effective tax collector, but if you are collecting it only from the very poor people, then your capacity does not amount to much, essentially. Many of the poor people earn below taxable income and those who can pay can only bring a drop in the ocean in terms of required revenue. So, the government has an incentive to make the economies thrive. Why? Because only then can the governments collect taxes, otherwise, if they do not promote economic development, it means the tax bases are very low. So, those to me are the two most important things – the capacity to collect taxes and a thriving economy which allows incomes to accrue to taxpayers,’’ he explained further.

The IMF contends that the state’s capacity to collect taxes holds central importance in financing investments and crucial social services, including health, infrastructure, and various public goods. The focus is notably on ‘capacity,’ delving into the details of how, where, and when taxation occurs, representing a primary aspect of capacity. ‘‘Are there taxable economic activities or incomes in the country, and in which sectors? For many African countries the question is, is the taxable income within formal or the informal sectors? So, the capacity becomes essential. Can you reach your formal and reach your informal activities equally, and how?’’, Gwaindepi quizzed. This sparked a debate on the nexus between DRM and informality in Africa, with researchers being sceptical of what can be raised in the informal sectors.

Informality and shadow economies in Africa

‘‘Informality refers to any activity which is not registered. So, this is doing an economic activity, which the state does not know about and thus cannot assess incomes for tax purposes. In the world of measuring progress, not knowing more about the majority of citizens´ economic activities possess many taxation challenges,’’ Gwaindepi clarified. However, this concept of informality has faced opposition in Gwaindepi’s working paper and that of other researchers . He posited that in developing regions such as Africa, informality does not solely pertain to unregistered businesses or individuals. Gwaindepi highlighted that informality extends its influence even within the formal realm. He elaborated that formal businesses might opt not to register certain transactions to exploit perceived advantages, thereby concealing paper trails and evading tax payments. This practice fosters an environment conducive to tax evasion and corruption, ultimately nurturing what is commonly referred to as a ‘‘shadow economy.’’

The shadow economy, known by various names like the gray economy, hidden economy, black economy, or cash economy, is outlined by Leandro Medina and Friedrich Schneider in their IMF working paper as comprising all economic activities hidden from authorities due to monetary and institutional motives. Notably, Africa trails behind other global economies in revenue mobilisation due to housing the largest share of shadow economies worldwide, encompassing not only informal sectors but a broader spectrum of economic activities. Supporting this standpoint, Gwaindepi asserts that shadow economies potentially hold greater significance than the informal sector. He likens shadow economies to a larger umbrella, encompassing and sheltering informal sectors within its broader scope. ‘‘I think the shadow economy is more important than the informal sector when it comes to taxation in Africa. For the informal sector, the visible street vendors are usually targeted but a lot more happens informally, and pockets of high incomes are not within sight. It is much harder to discover where real pockets of wealth are within the informal economic activities. While vendors are harassed for not paying taxes, for instance, there are home based and online based car sales with taxable incomes. But when you say shadow economy, you are saying, wait a minute, there could be even big companies who go under the radar, so to speak. So, the shadow economy is much broader and useful when thinking about taxation. It is like the bigger umbrella here, where the subsistence informal workers also find themselves’’, Gwaindepi argued.

Focusing only on the informal sectors addresses a fraction of the broader issue. Therefore, it is important to delve deeper into the scope of informal economic activities, spanning from small, unregistered enterprises to larger, formal ones. This comprehensive understanding of informality within an economy shapes the most viable strategies for revenue mobilisation. Hence, the effectiveness of taxation hinges upon the specific type of informality present. In developing regions like Africa, the base tier of informality comprises individuals with limited education, often unemployed, who rely on subsistence activities, particularly in agriculture, to sustain their livelihoods.

Understanding these diverse aspects of informality is crucial for designing targeted and effective revenue mobilisation approaches. Addressing the largest category of informality in Africa, despite its size, remains a challenge in achieving substantial revenue projections. The conventional approach would typically involve digitising systems and aiming to register everyone, with the expectation that this process would result in increased revenues. ‘‘I think that is one of the huge assumptions I and other researchers are trying to unpack. We have low tax revenues because we have huge portions of citizens generating livelihood in the big informal sectors. If only we could register them, the assumption goes, and make sure everyone is paying taxes, then, we reach our goal. This is an error, because not all informal businesses are equal. They are segmented as I show in the working paper. Subsistence informality cannot produce the desired taxes even with state-of-the-art registration programmes and systems!’’ Gwaindepi exclaimed.

Gwaindepi further proposed that understanding the root causes prompting people to engage in informal sectors stands as the primary concern and a key step in improving low tax revenues. Merely imposing new taxes through digitisation does not naturally translate into increased revenues. For instance, cases in both Kenya and Ghana illustrate that government-imposed taxes or levies on electronic transactions via digital platforms, such as M-PESA and MOMO (akin to MobilePay in Denmark), resulted in panic withdrawals and a decline in electronic transactions rather than the anticipated revenue surge.

The role of the informal sector in revenue mobilisation

‘‘The question is what has the state done and what is it doing for the informal sector for reciprocal voluntary tax compliance to exist?’’, Gwaindepi quizzed.

Gwaindepi advocates for incentivising tax payment among citizens by offering improved services. This a marathon rather than a sprint because it takes time, but it is necessary. He proposes that interventions, such as empowering the informal sector, could effectively achieve this goal. By demonstrating tangible government support to the informal sector, individuals within it would likely feel encouraged and equipped to contribute taxes. ‘‘I think that is where the issue is. Taxation transactions are not a one-way street. Tax morale remains low because taxpayers do not get public services. Many informal sectors are underserved by governments, and this is the big problem we have in Africa. We think that it is only about capacity to raise taxes, but governments need to invest more. It is a two-way street, and it is about service provision’’, Gwaindepi asserted.

Moreover, the World Bank asserts that governments should prioritise fairness and equity within their tax systems. This necessitates aligning objectives, such as enhancing revenue mobilisation, fostering sustainable growth, and minimising compliance burdens. Fairness plays a pivotal role in augmenting tax collections. It is crucial for governments to ensure that fairness considerations encompass the equitable taxation of both the affluent and the impoverished, as well as encompassing both formal and informal sectors. The international tax systems also matter. Large firms/corporations have been able to take advantage of globalisation and lapses in international tax systems. Base erosion and profit shifting remain a menace that affects LICs, especially in Africa. A recent Global tax evasion report shows that global billionaires pay only 0-0.5% of taxes due to the use of shell companies. This adds to the existing illicit capital flows from Africa.

Joel Agbesinyale holds a Master Degree in Development Studies, Lund University, Sweden

Measuring ‘Poverty in Bundles’: A New Method to Target Poverty Reduction

Namrata Acharya — Mon, 08 May 2023 11:09:35 +0000

The Global Multidimensional Poverty Index (MPI) is a yearly publication by the UN that measures worldwide poverty levels. This year, a new way to address poverty was introduced. For the first time, it uses a concept called ‘poverty in bundles’, or a combination of deprivations a person suffers, to assess the precise nature of poverty across regions. The idea is to tackle the problem through a targeted approach.

To understand the concept of ‘poverty in bundles’, it is important to acknowledge the MPI, an index launched in 2010 by the Oxford Poverty and Human Development Initiative at the University of Oxford and the United Nations Development Programme (UNDP). It was a step towards achieving the UN’s SDG 1 to end poverty everywhere in all its forms.

The MPI measures deprivation for each household by monitoring ten indicators spanning across three broad categories — health, education and standard of living. Within each of these dimensions there are indicators of deprivations. In the dimension of health are nutrition and child mortality, within education, years of schooling and attendance, and within the standard of living there are six indicators — cooking fuel, sanitation, drinking water, electricity, housing and assets. Each of these indicators is given equal weightage within each broad category while calculating the overall MPI.

For the first time, the UN report looks into the interlinkages among the ten indicators of the MPI. It investigates the overlap in deprivation indicators in pairs, triplets, or bundles. For example, the report found that 80 percent of poor people who are deprived of drinking water also experience deprivations in sanitation, this is an interlinked pair. Again, almost half of the poor people, 470.1 million, are deprived of both nutrition and sanitation worldwide, a pair that makes them more vulnerable to infectious diseases.

The findings of the 2022 report state that across 111 countries, 1.2 billion people, or 19.1 percent, live in acute multidimensional poverty. This compares to 1.3 billion people, 21.7 percent, across 109 countries in 2021. The largest number of poor people live in Sub-Saharan Africa, nearly 579 million, followed by South Asia with 385 million people.

MPI is being increasingly seen as a more rigorous measure of poverty than income. In recent research, called the Relationship Between Income Poverty and Multidimensional Poverty in China, Xiaolin Wang and others found that the coincidence of income poverty and multidimensional poverty is 31 percent. In other words, 69 percent of multidimensionally poor households are not considered poor in terms of income poverty in China. While an increase in income can significantly reduce multidimensional poverty, its impact is therefore limited.

The interlinkages in the MPI can identify patterns of poverty across different regions of the world

For example, the UN report says that a poor person in South Asia is more likely to be deprived of nutrition, cooking fuel, sanitation and housing, while a poor person in Sub-Saharan Africa is more likely to have those deprivations, along with drinking water and electricity.

In complying with the SDG, the multi sectoral policies, formulated on the basis of interlinkages, can not only lift millions out of poverty, but also minimize poor people’s burden by enabling them to overcome multiple deprivations at the same time, says the UN report. The study finds that there are 120 possible deprivation triplets, and the diversity of deprivation patterns is striking.

The UN report has a special mention of India, where 415 million people experienced poverty between 2005-2006 and 2019-2021. Rural areas, also the poorest, saw the fastest reduction in MPI value. The incidence of poverty fell from 36.6 percent in 2015-2016 to 21.2 percent in 2019-2021 and from 9.0 percent to 5.5 percent in urban areas.

Limitations of the MPI

However, measuring poverty solely on the basis of MPI has its own limitations. Most importantly, it ignores the purchasing power of people. For example, in the case of India, where the income per capita is much lower than in other parts of the world, the MPI ignores the stagnating income levels. According to data by the UN’s International Monetary Fund (IMF), India’s per capita income in 2021 was one of the lowest in the world at $2,191, which puts it in the 144th position out of 194 economies.

“I think that the figures on household amenities are plausible and that most of these facilities are actually being utilized, with the partial exception of toilets. None of the deprivations included in the multidimensional poverty index capture short-term purchasing power. It is important to bear that in mind, especially when we are looking at episodes like the last few years in India, when many people’s purchasing power has been eroded” says Jean Dreze, Visiting Professor at Ranchi University, India, in an email to DDRN.

“There is no contradiction. Poverty in India is declining, but India is still one of the poorest countries in the world. In some aspects of poverty, like nutrition, progress has been very slow, so that India’s position vis-à-vis other countries has deteriorated”, adds Dreze. The underlying data for India used in the report are based on what is known as “the censored headcount ratio” or HCR. The censored data integrate the deprivation in one dimension, e.g. nutrition, with all other dimensions e.g. fuel, sanitation, etc.

Therefore, a person might not be able to afford two square meals, but his deprivation will decline if he has other amenities like toilets and electricity. The uncensored HCR captures what can be said as undiluted deprivation in each category. Further, a look into the MPI data shows per capita consumption declined from 3.8% to 3% between 2005-15 and 2015-21, the latter being the Modi era.

“Also, when uncensored data are taken into consideration, the level of poverty decline is much lower than that in the case of censored data”, points out Drèze. For example, the decline in the deprivation rate of average ‘living standard,’ comes at 14% in the case of censored data, but only 8% in the case of uncensored ones. INTERACTIVE CHART

Earlier, every five years, the government published a survey of consumption expenditure, a repository of data on the purchasing power of the rural and urban populations. In 2017-18, the government scrapped its own consumption expenditure survey stating quality issues—a precedence not seen before. The leaked report, published in the media, had some disturbing facts— the average monthly spending of an Indian fell by 3.7% between 2011-12 and 2017-18. It declined by 8.8%t in villages.

“The notable decline in poverty in India does not match with ground reports”, said Dipa Sinha, Assistant Professor of Economics at Ambedkar University, India, in a zoom interview with DDRN. India still must go a long way in terms of eradicating hunger. It ranks 107th among 121 nations in terms of hunger—a ‘serious’ concern, according to the Global Hunger Index. INTERACTIVE CHART

“The findings are true, but when we look at the ground reports, there is a mismatch. We have seen many more toilets and gas cylinders in Indian households than before. What is missing from the data are effects, like nutritional or learning outcomes, as well as aspects like purchasing power and access to resources”, says Sinha. One of the limitations that the UN report notes is the lack of availability of harmonized data. It says that the irregularity of multitopic household surveys hinders the power and potential of the global MPI.

The report states, that “it is time to emphatically raise alarm on missing data on measuring poverty”. While the MPI comes with its own limitations, the interlinkages among different dimensions of deprivation that the UN report highlights offer new forms of solutions toward targeted poverty alleviation schemes. At the same time, a robust database can add multifold efficiency. Depending solely on MPI, while ignoring other measures of development, like the Purchasing Power Parity (PPP), which measures the purchasing power of the people at a given time, might be an instance of self-denial.

Namrata Acharya is a journalist with bylines in Al Jazeera, South China Morning Post Zenger News, Mongabay, The Wire, The Juggernaut, KR- Asia and more.

Xiaolin Wang is the deputy dean and a professor at the Institute for Six-sector Economy at Fudan University. His main research areas are innovation and international development, poverty measurement, public service, digital economy, and industry convergence. He has served as deputy director-general of the Information Center of the State Council Leading Group Office of Poverty Alleviation and Development, China. He was also the chief of the research division of the International Poverty Reduction Center in China (IPRCC) between 2015 and 2019.

Jean Drèze is a Belgian-born Indian development economist who has been influential in the economic policy making of India. His co-authors include Nobel laureate in economics Amartya Sen, with whom he has written on famine, Nicholas Stern, with whom he has written on policy reform when market prices are distorted and Nobel laureate in economics Angus Deaton. He is currently an honorary Professor at the Delhi School of Economics, and Visiting Professor at the Department of Economics, Ranchi University. He was a member of the National Advisory Council of India in both first and second term.